Home loan prepayment calculator
Paying an extra EMI every year and raising your EMI as your salary grows come up again and again in Ankur Warikoo's Money Matters series, from Ep. 11 on paying off all your loans to Ep. 79 on managing money after a home loan. This home loan prepayment calculator shows how much interest each habit saves and how many years it cuts.
Your loan
Your prepayment plan
Most of your first EMIs pay the bank, not the loan
Take a ₹50 lakh loan at 8% for 20 years. The EMI is ₹41,822. In the first year you pay about ₹5.02 lakh, and roughly ₹3.96 lakh of that is interest. Only about ₹1.06 lakh reduces the loan. Over the full 20 years, interest adds up to about ₹50.4 lakh, slightly more than you borrowed. Every rupee you prepay early skips years of interest on it.
| ₹50 L at 8%, 20 years | Closes in | Interest saved |
|---|---|---|
| Regular EMI only | 20 yrs | n/a |
| One extra EMI a year | 16 yrs 11 mo | ₹9.10 L |
| EMI up 10% a year | 9 yrs 9 mo | ₹23.95 L |
| Both together | 9 yrs 1 mo | ₹26.11 L |
Monzy's calculation, assuming the extra EMI is paid at the end of each loan year and the step-up starts in year two.
Set aside one-twelfth of your EMI every month in a recurring deposit or liquid fund, then prepay the lot once a year. On a ₹41,822 EMI that is about ₹3,500 a month. A bonus or tax refund works just as well. On the example loan this alone cuts about three years.
Your EMI stays fixed while your income grows, so the loan takes a smaller bite every year. Raising the EMI by 10% each year, in step with your raise, keeps that bite the same and sends the extra straight to the principal. This is the bigger lever by far, cutting the example loan to under 10 years.
Where this theme comes up in Ankur Warikoo's Money Matters
Money Matters is Ankur Warikoo's series in which he works through real people's finances. Prepaying loans and stepping up repayments as income grows run through several episodes. Watch them for the full context, then use the calculator to run your own numbers.
Not sure whether to prepay at all? The prepay vs invest calculator compares the two.
Is this the home loan prepayment calculator from Ankur Warikoo's Money Matters?
This calculator is built by Monzy around a theme that runs through Ankur Warikoo's Money Matters series: prepaying loans and raising repayments as your income grows. Episodes 11, 16, 21, 33 and 79 touch on it, including Ep. 11 on paying off all your loans and Ep. 79 on managing money after a home loan. The numbers on this page are Monzy's own calculations, so you can test the idea against your loan.
How much do I save by paying one extra EMI a year on my home loan?
On a ₹50 lakh loan at 8% for 20 years, one extra EMI a year closes the loan in about 16 years 11 months and saves about ₹9.1 lakh in interest. That extra EMI is ₹41,822 a year, or roughly ₹3,500 a month if you set it aside monthly. The higher your rate and the longer your tenure, the more it saves.
What is a home loan EMI step-up, and is 10% a year realistic?
A step-up means raising your EMI by a fixed percentage every year, usually in line with your salary hike. At 10% a year, the ₹50 lakh loan in our example closes in about 9 years 9 months instead of 20, saving about ₹24 lakh. The catch is that your EMI keeps rising, so by year five it is about ₹61,000. If your raises are smaller, a 5% step-up still cuts the loan to about 12 years.
Should I reduce my EMI or my tenure when I prepay a home loan?
Reducing tenure saves more interest, because you keep paying the same EMI and the loan simply ends sooner. Reducing the EMI eases your monthly budget but leaves the loan running for the full term. Most lenders let you choose when you part-prepay. Ask for a revised repayment schedule each time to confirm the change.
Are there prepayment charges on home loans in India?
Not on floating-rate loans to individuals. RBI rules bar banks and NBFCs from charging prepayment penalties on floating-rate loans to individuals sanctioned or renewed from 1 January 2026, for part or full prepayment, whatever the source of funds. Fixed-rate loans can still carry a charge, so check your loan agreement.
Is it better to prepay a home loan or invest the money?
It depends on your loan rate, your tax regime and what you expect to earn. Prepaying gives a guaranteed return equal to your loan rate. Investing in equity may earn more over long periods but comes with risk. Under the old tax regime, the interest deduction lowers the real cost of the loan, while under the new regime there is no deduction. Monzy's prepay vs invest calculator works through both options for your numbers.
When does prepaying a home loan save the most?
Early in the loan. In the first year of a 20-year loan at 8%, close to 80% of your EMI goes to interest, so every rupee you prepay then avoids the most future interest. Later in the loan most of the EMI is principal, and prepaying saves less. Build your emergency fund and clear costlier debt first, then prepay as early as you can.