EMI & Prepayment Calculator
Your EMI and total interest, then what each prepayment strategy actually saves — and the one number that settles “prepay or invest”: the return you would need to earn to come out ahead by investing instead.
Deciding whether to buy at all? Start with the rent vs buy calculator. Education only — not advice.
Your loan
Three numbers, then pick a prepayment to test.
Add detail — rate change, invest-instead return, 24(b) tax benefit
e.g. 0.5 for a 50 bps hike
0 = no change
expected, before tax
12.5% equity LTCG; your slab for debt
for the 24(b) benefit
Compared with paying only the EMI
One extra EMI a year saves ₹10.29 L and 3 y 3 m
How this is worked out. The EMI is fixed by the loan. Every prepayment cuts the balance, so less interest is charged from then on. With a plan set, the comparison shows whether the same rupees invested at 11% would have grown to more instead.
EMI
₹43,391
Total interest
₹43.85 L
was ₹54.14 L
Paid off in
16 y 9 m
was 20 years
Prepay, or invest the same rupees?
Prepay, then invest the freed EMIs
₹22.27 L
Invest the prepayments at 11%
₹27.12 L
Same monthly budget for both, balances compared when the original loan would have ended, 12.5% tax on gains. Investing wins only above 9.1% a year after tax.
Outstanding balance
Month by month, paying only the EMI versus your prepayment plan.
Home loan prepayment
Saves ₹10.29 L · 3 y 3 m sooner
₹50.00 L at 8.5% for 20 years · One extra EMI a year
- EMI
- ₹43,391
- Interest, EMI only
- ₹54.14 L
- Interest with prepayment
- ₹43.85 L
- Investing wins above
- 9.1%
Monthly reducing balance · estimate, not advice · jpvfin.com
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Prepaying is a guaranteed, tax-free return equal to your loan rate — 8.5% here. Investing beats it only if you can clear that rate after tax, reliably, for the whole remaining tenure. Whether the house itself is worth buying is the other question; see the rent vs buy calculator.
Estimate only. Monthly reducing balance, EMI charged before any prepayment in the month, no prepayment penalty (RBI bars one on floating-rate loans to individuals), no processing fee, and the bank keeps the EMI and shortens tenure on a rate rise unless you choose “reduce EMI”. Your lender's statement is the authority on your actual schedule.
Why early prepayments count for more
The EMI is fixed, but its split is not. On ₹50 lakh at 8.5%, ₹35,417 of the first ₹43,391 EMI is interest; by year 15 it is under ₹15,000. A rupee prepaid in year 2 removes principal that would have carried interest for 18 years; the same rupee in year 15 saves a fraction of that.
Prepay vs invest, honestly
Prepaying is a risk-free, tax-free return at your loan rate. To beat it by investing you must clear that rate after tax, every year, for the rest of the tenure. The calculator states the crossover return; if you claim 24(b), it nets the lost deduction out of the interest saved so the comparison is fair.
Tenure, not EMI
After a prepayment the bank will usually offer to lower your EMI. Decline unless cash flow forces it: keeping the EMI and cutting the tenure saves several times more interest, because the balance keeps falling at the original pace.
What the bank will and will not charge
- No penalty on floating-rate loans to individuals (RBI rule).
- Rate rises usually extend tenure silently; ask for the EMI to rise instead.
- Prepay right after an EMI date so the amount hits principal, not accrued interest.
- Get a revised amortisation schedule in writing after every prepayment.
Frequently asked questions
How is a home loan EMI calculated?+
EMI = P × r × (1+r)^n ÷ ((1+r)^n − 1), where P is the loan, r the monthly rate (annual ÷ 12) and n the number of months. On ₹50 lakh at 8.5% for 20 years that is ₹43,391 a month, of which the first month's interest is ₹35,417 — which is why early prepayments save so much: almost the whole EMI is interest at the start.
Should I prepay my home loan or invest the money?+
Prepaying earns a guaranteed, tax-free return equal to your loan rate. Investing wins only if you reliably beat that rate after tax for the rest of the tenure. The calculator finds the exact crossover return for your loan and prepayment; if it comes out above what you honestly expect from your investments, prepay. Keep an emergency fund first either way.
Does one extra EMI a year really make a difference?+
On ₹50 lakh at 8.5% for 20 years, paying a thirteenth EMI each year saves about ₹10.3 lakh of interest and clears the loan 3 years 3 months early. The rupees are small relative to the loan; the effect is large because every rupee goes straight to principal at a point where interest dominates the EMI.
Reduce tenure or reduce EMI after prepaying?+
Reducing tenure saves far more interest, because the balance keeps falling at the same speed. Reducing the EMI eases monthly cash flow but keeps you paying interest for the full term. Most borrowers who can afford the current EMI should reduce tenure.
Are there prepayment charges?+
Not on floating-rate loans to individuals — the RBI bars lenders from charging foreclosure or part-prepayment penalties on them. Fixed-rate loans and loans to companies can carry charges, typically 2–4% of the amount prepaid. Check the sanction letter.
What happens to my EMI when rates rise?+
Most banks keep the EMI unchanged and extend the tenure, sometimes by years; you can ask to raise the EMI instead. The calculator's rate-change setting shows both: choose 'reduce tenure' to see the extended term, 'reduce EMI' to see the recomputed instalment.
Sources and references
- Foreclosure and part-prepayment charges on floating-rate loans to individuals: Reserve Bank of India circulars on levy of foreclosure charges.
- Interest on a self-occupied house, section 24(b), capped at ₹2 lakh in the old regime: Income Tax Department.
- EMI formula and month-by-month schedule verified against the standard monthly-reducing method used by Indian banks; the ₹43,391 figure for ₹50 lakh at 8.5% over 20 years reproduces every major bank's published calculator.
Disclaimer: Educational only, not financial advice. Assumes a monthly reducing balance, no processing fee or penalty, and a constant rate except where you set a change. Your lender's statement is the authority on your actual schedule.
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