Calculate your monthly home loan EMI, then see how much interest and time you can save by making extra monthly prepayments or a one-time lump-sum prepayment.
The EMI is fixed using the reducing-balance formula EMI = P × r × (1 + r)^n ÷ ((1 + r)^n − 1), where P is the loan amount, r is the annual rate divided by 12 and then by 100, and n is the tenure in months. Indian banks use this same method for home loans.
For the prepayment side, the calculator then walks through the loan one month at a time. Each month it charges interest on the balance still outstanding, takes the rest of the EMI as principal, and subtracts any extra payment you entered. The EMI stays the same, so every rupee prepaid shortens the loan instead of lowering the instalment. The month in which the balance reaches zero is your new payoff time.
A ₹50,00,000 loan at 8.5% a year over 240 months has an EMI of ₹43,391.16. Over the full term you would pay about ₹54.14 lakh in interest, which is more than the amount borrowed. In the first year alone, roughly ₹4.21 lakh of your EMIs goes to interest and only about ₹99,500 reduces the principal.
Here is what different prepayment plans do to the same loan:
| Prepayment plan | Loan closes in (months) | Total interest | Interest saved |
|---|---|---|---|
| None | 240 | ₹54,13,879 | — |
| ₹5,000 extra every month | 187 | ₹40,24,629 | ₹13,89,250 |
| ₹2 lakh once, in month 12 | 219 | ₹46,84,454 | ₹7,29,425 |
| Both of the above | 173 | ₹35,69,160 | ₹18,44,718 |
An extra ₹5,000 a month, about 11.5% more than the EMI, cuts more than four years off the loan.
A longer tenure makes the EMI easier to carry but sharply raises the total interest. For the same ₹50 lakh at 8.5%:
| Tenure | Monthly EMI | Total interest |
|---|---|---|
| 15 years | ₹49,237 | ₹38.63 lakh |
| 20 years | ₹43,391 | ₹54.14 lakh |
| 30 years | ₹38,446 | ₹88.40 lakh |
Going from 20 to 30 years lowers the EMI by under ₹5,000 but adds over ₹34 lakh of interest. A practical approach many borrowers use is to take a tenure whose EMI is comfortable, then prepay whenever a bonus or surplus arrives. That keeps the monthly commitment safe while still closing the loan early.
Most home loans in India are on floating rates linked to an external benchmark such as the RBI repo rate, so your rate can move several times over the loan. If the rate on the ₹50 lakh example were 9% instead of 8.5%, the EMI for a 20-year term would be about ₹1,595 higher at ₹44,986, and total interest about ₹3.8 lakh higher. When rates rise, many lenders keep the EMI unchanged and extend the tenure instead, which can quietly add years to the loan. After any rate revision, rerun this calculator with the new rate and your outstanding balance, and ask your lender whether you can raise the EMI rather than lengthen the term.
Tax is one reason some borrowers hesitate to prepay. If you are in the old regime and your yearly interest is well above ₹2 lakh, a prepayment that still leaves interest above that limit does not reduce your tax benefit, because you could only claim ₹2 lakh anyway. In the new regime there is no interest deduction on a self-occupied home to lose.
The Income-tax Act, 2025 replaces the 1961 Act from 1 April 2026 and renumbers these sections. Limits and conditions can change with each Budget, so confirm the current rules on the Income Tax Department website or with a tax adviser.