Calculate how much interest you save and how many months you cut off your loan tenure by making a lumpsum prepayment.
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Personalised EMI for ₹30.0L over 240 months. Rates as of May 2026.
| Bank / NBFC | Interest Rate | Your EMIat starting rate | Monthly Savings | |
|---|---|---|---|---|
LIC LIC Housing Finance BESTLowest starting rate | 7.15%p.a. | ₹23,530/month | + ₹1,563/mo₹3.8L total | Apply |
BoB Bank of Baroda40 L+ homes financed | 7.20%p.a. | ₹23,620/month | + ₹1,473/mo₹3.5L total | Apply |
PNB Punjab National BankPSB with fast approval | 7.20%p.a. | ₹23,620/month | + ₹1,473/mo₹3.5L total | Apply |
SBI State Bank of IndiaIndia's largest bank | 7.25%p.a. | ₹23,711/month | + ₹1,382/mo₹3.3L total | Apply |
BHF Bajaj Housing Finance3-min online approval | 7.25%p.a. | ₹23,711/month | + ₹1,382/mo₹3.3L total | Apply |
ICI ICICI BankInstant sanction letter | 7.45%p.a. | ₹24,076/month | + ₹1,017/mo₹2.4L total | Apply |
TAT Tata Capitalup to 12% | 7.50%p.a. | ₹24,168/month | + ₹925/mo₹2.2L total | Apply |
KMB Kotak Mahindra BankDoorstep documentation | 7.70%p.a. | ₹24,536/month | + ₹557/mo₹1.3L total | Apply |
HDF HDFC BankLowest max rate | 7.75%p.a. | ₹24,628/month | + ₹465/mo₹1.1L total | Apply |
AXS Axis Bankup to 9.8% | 8.00%p.a. | ₹25,093/month | Lowest Rate 🏆 | Apply |
Rates shown are indicative starting rates (best-case, salaried applicants). Actual rate depends on credit score & eligibility. Affiliate links — we may earn a commission at no cost to you.
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Prepayment done in year 3 (outstanding ~₹47L). Choosing to reduce tenure, not EMI.
| Prepayment Amount | Interest Saved | Tenure Saved | ROI on Prepayment |
|---|---|---|---|
| ₹1 lakh | ~₹2.1L | ~14 months | ~210% |
| ₹2 lakh | ~₹4.1L | ~27 months | ~205% |
| ₹5 lakh | ~₹9.6L | ~62 months | ~192% |
| ₹10 lakh | ~₹17.4L | ~108 months (9 yrs) | ~174% |
ROI shown is the interest savings relative to prepayment — your money effectively earns 8.5% guaranteed, risk-free. Compare against your after-tax investment returns when deciding.
The most effective way to prepay without disrupting monthly cash flow:
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If loan interest rate > expected investment return after tax ? prepay. If your home loan rate is 8.5% and equity SIP returns 12%+ ? invest. For debt-averse individuals or loans above 9%, prepayment is often the safer choice.
Early in the tenure — when the interest component in EMI is highest. Prepaying in year 1–5 of a 20-year loan saves dramatically more than prepaying in year 15. The benefit reduces significantly in the second half of tenure.
RBI mandates that floating rate home loans cannot have prepayment penalties. Fixed rate loans may have 2–3% penalty from some banks. Always check your loan agreement before prepaying.
Any amount helps, but larger lump sums (like annual bonus or matured investment) create the most impact. Even ₹1–2 lakh extra on a ₹50L loan can save ₹3–5 lakh in interest and cut tenure by 2–3 years.
Reducing tenure saves significantly more total interest. Example on Rs 50L loan at 8.5%, 20 years, after 5 years: Rs 5L prepayment to reduce tenure saves Rs 6.2L interest. Same prepayment to reduce EMI saves only Rs 2.1L. Always opt for tenure reduction unless you genuinely need the cash flow relief from a lower EMI.
For floating rate home loans: RBI regulations prohibit prepayment charges for individual borrowers. You can prepay any amount at any time for free. For fixed rate loans, banks can charge up to 2-3% of the prepaid amount. Always confirm with your bank before deciding between fixed and floating rate - the free prepayment option on floating rate is a significant advantage.
If your loan interest rate is 8.5%, an investment earning above 8.5% after tax favours investing over prepaying. NPS equity historically at 12% beats the 8.5% home loan rate. Rule of thumb: if you can earn more than the loan rate after tax with reasonable certainty, invest. For risk-averse borrowers, the guaranteed interest savings from prepayment is always superior.
Most advisors suggest an annual prepayment strategy: once a year, prepay 5-10% of the outstanding principal using year-end bonuses. This systematically reduces the loan tenure. Avoid irregular very small prepayments below 1% of outstanding - the bank processing sometimes equals the interest saved. Set an annual prepayment date and stick to it.
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