A Guide To Home Loan Prepayment Calculator

What is Home Loan Prepayment?

Home loan prepayment means making a lumpsum payment towards the loan before the end of the loan tenure. A longer loan tenure means an increased interest outgo; thus, prepayment of the loan is an effective way to reduce your interest payments and loan debt. Loan prepayment usually causes either a reduction in the EMI payment or loan tenure. Either way, loan prepayment can cause a significant reduction in your loan payment burden.

However, before you begin your loan prepayment process, you must know what prepayment charges you will need to pay and whether it is a viable option. This is where a housing loan prepayment calculator can help.

Why Do You Need a Home Loan Prepayment Calculator? 

After a few years into your home loan tenure, there may come a time when you have some extra finances and decide to pay off your loan. While loan repayment is the best way to take the EMI burden off your shoulder, you must use a home loan prepayment calculator before you take the leap. A home loan prepayment calculator is a useful financial tool that can help you calculate how much you will save through loan prepayment and how that will impact your loan EMI. 

Home loan eligibility depends on many factors. Individuals can easily check their home loan eligibility through an online home loan eligibility calculator before deciding to avail of a home loan.

How Does a Home Loan Prepayment Calculator Work?

The online home loan prepayment calculator tool helps determine the viability of choosing the loan prepayment option. Most home loan prepayment calculators can help determine four major factors of the loan that impact prepayment:

  • Amount or percentage of EMI saved
  • EMI amount due
  • Revised EMI amount due
  • Revised loan tenure

With these factors, you can find out the amount of money you can save and your revised EMI amount.

Compared to complex and time-consuming manual cal calculations online loan prepayment calculator is simple. You need to give the following information:

  • Outstanding loan amount
  • Loan tenure
  • Interest rate
  • Prepayment amount you wish to pay

Once you give all the details, you can calculate the total savings to determine the loan prepayment option.

Benefits Of Using Loan Prepayment Calculator

A home loan prepayment calculator can:

  • Help you decide the viability and profitability of making a prepayment against your loan
  • Help you manage your finances effectively
  • Help you reduce the outstanding loan amount and lower monthly EMIs.
  • Reduce the rate of home loan interest outgo and lower the loan cost.

Eligibility For Home Loan Prepayment

Any individual is eligible to make complete or partial prepayment against an outstanding loan if the lender permits it. Some lenders do not allow prepayment as it may cause big losses to them. It is vital to check the loan prepayment clause before signing the agreement and check if the bank is imposing any penalty for loan prepayment. To check if you are eligible for a home loan, you can use a home loan eligibility calculator to make things easy.

Things To Remember Before Making Home Loan Prepayment

– Borrower’s Age

If the borrower is close to retirement, it is better to make the home loan prepayment before he retires as post-retirement. There is no source of income and more chances of defaulting on the home loan.

– Future Finance Requirements

You must consider your future financial requirements before making a prepayment, as once you make the prepayment, it can exhaust all your savings. Ensure that you have your financial plan before making the decision.

– Savings From Prepayment

You must consider doing loan prepayment only if you have enough savings on the interest outgo. You can avoid home loan prepayment if you do not have substantial savings. For instance, during the later years of your home loan, the EMI interest component is much lower than that of the initial years. Hence, you will only achieve little savings if you prepay the loan during the final stage of its tenure. 


You can decide to do home loan prepayment if you have considerable savings against your loan. For instance, if you are considering a home loan in Chennai, understand your financial and repayment capacity before making the decision. Use the home loan eligibility calculator to check your eligibility for a home loan and the prepayment calculator tool to clarify your repayment decision.

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