Should I reduce EMI or tenure after a home loan prepayment?

Reducing the tenure saves significantly more interest in the long run. When you reduce EMI, you still pay for the original number of years — you just pay less each month. When you reduce tenure, you exit the loan sooner and stop paying interest entirely. Unless cash flow is very tight, tenure reduction is the better choice.

Is there a prepayment penalty on home loans in India?

For home loans with floating interest rates, the Reserve Bank of India (RBI) prohibits banks from charging prepayment penalties. For fixed-rate home loans, lenders may charge a prepayment fee of 2–3% of the prepaid amount. Always confirm with your bank before making a large prepayment.

How much can I save by prepaying ₹5 lakh on my home loan?

The savings depend on the outstanding balance, interest rate and remaining tenure. For a ₹50 lakh loan at 9% with 20 years remaining, a ₹5 lakh prepayment today saves approximately ₹9–11 lakh in total interest and cuts the tenure by about 3 years. Use our calculator for the exact figure.

When is the best time to make a home loan prepayment?

The earlier in the loan tenure you prepay, the greater the savings — because you stop interest from compounding on a larger outstanding balance for longer. Prepayments made in the first 5 years of a 20-year loan save 2–3x more than the same prepayment made in year 15.

Is it better to prepay a home loan or invest the money in SIP?

This depends on your interest rate and expected investment returns. If your home loan rate is 9% and you expect equity SIP to return 12% CAGR, investing may build more wealth — but with market risk. Prepayment gives a guaranteed risk-free 'return' equal to your loan rate. Our Prepayment vs SIP calculator can model both paths for your specific situation.

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Home Loan Prepayment Calculator

See how making prepayments can reduce your loan tenure and save you lakhs in interest.

Loan & Prepayment Details

Loan Amount (₹)

Original or outstanding loan amount

Interest Rate (%)

Your current home loan rate

Loan Tenure (Years)

Total loan repayment period

Prepayment Amount (₹)

Additional amount to pay

Prepayment Frequency

How often you'll make the prepayment

Prepayment Impact

Monthly EMI₹0

EMI remains the same, tenure reduces

Original Tenure

0 months

New Tenure

0 months

Tenure Reduced By

Loan paid off earlier

0 months

Total Interest Saved

₹0

by making prepayments

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