What is Prepayment / Foreclosure Calculator?
Calculate how much interest you save by making a lump sum prepayment on your home or personal loan Simply enter your values, and the calculator instantly computes accurate results using standard financial formulas. All calculations are performed entirely in your browser — nothing is stored or transmitted.
Formula Used
After prepayment, new outstanding principal = Old outstanding − Prepayment amount. You can choose to reduce EMI (keeping tenure same) or reduce tenure (keeping EMI same). Tenure reduction saves more interest.
How to Use This Calculator
- Enter your original loan amount, rate, and tenure
- Enter EMI number at which you plan to make prepayment
- Enter the prepayment amount (lump sum)
- Choose whether to reduce EMI or reduce tenure
- Click Calculate to see interest saved and new repayment schedule
Worked Example
Home Loan: ₹50L | 8.5% | 20 yrs | After 2 yrs: Prepay ₹5L → Interest Saved: ₹11,75,000 | Tenure reduced by 3.5 years
Why Use This Tool?
- See exact interest savings from any prepayment amount
- Decide optimal time to prepay for maximum savings
- Compare tenure reduction vs EMI reduction strategy
- Plan bonus or windfall utilization for maximum loan savings
Frequently Asked Questions
Is it better to reduce EMI or tenure after prepayment?
Reducing tenure saves significantly more interest. When you reduce tenure (keep EMI same), the loan closes faster and every remaining EMI contributes more towards principal. Reducing EMI improves monthly cash flow but extends total interest payment.
When is the best time to make a home loan prepayment?
Prepayment in the early years of the loan saves the most interest, because in the initial years, a larger portion of EMI goes towards interest. After year 15 of a 20-year loan, most of the interest is already paid, so prepayment savings are minimal.
Can banks charge prepayment penalty on home loans?
No. RBI mandates that banks cannot charge prepayment penalty on floating rate home loans. For fixed rate home loans, banks may charge 2-3% on the prepaid amount. NBFCs can charge prepayment fees even on floating rate loans.
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