Home Loan Prepayment EMI Calculator

A home loan prepayment calculator is an important tool for those who are looking to save money on their home loan payments. By inputting your currеnt loan dеtails and prе-paymеnt plans, this calculator provides an insightful forеcast of your rеducеd tеnurе or EMIs. Simplify your financial planning and makе informеd dеcisions on how prе-paymеnts can optimisе your long-term financial goals with this usеr-friеndly intеrfacе. It helps you to calculate how much amount of money you can save by just paying some extra payments towards your home loan balance. In addition, this emi calculator for home loan with prepayment will help you to understand and estimate in how much time you could pay off your home loan if you plan to make regular home loan prepayments. It will help you to understand better and to make an informed decision about your home loan payments.

  • 5 Lac
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  • 1 K
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EMI
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Revised Monthly EMI

Key Takeaways:

Original EMI

Revised EMI

Savings in Interest

What is the Home Loan EMI Prepayment Calculator?

A housing loan prepayment calculator is a stalwart online tool that is precisely designed to help borrowers. Borrowers can themselves determine the felicitousness of the part prepayment option. You get the option to compute exact values by entering basic details such as loan amount, repayment tenure, together with the part prepayment amount you want to pay. The home loan emi calculator with prepayment allows you to depict the savings you are about to get.

With a housing loan prepayment calculator, you get to know four essential aspects, including the revised monthly installment, the total percentage saved on monthly EMIs, the repayment tenure reduction, the due amount, and total savings. Utilize the emi prepayment calculator to know whether you should move forward with the prepayment of the loan or not.

Although the manual calculations of such changes can be daunting, there are chances of errors. Rather than wasting your valuable time calculating these values, use our online housing loan prepayment emi calculator and make the appropriate computations.

This above easy to use emi prepayment calculator need you to enter below mentioned field:

  • Loan Amount
  • Original Loan Tenure
  • Current Rate of Interest
  • Prepayment Amount
  • Number of EMI’s Paid

Based on the values you provided in the above home loan emi calculator with prepayment, you can view the revised monthly home loan EMI to the right side of the calculator.

How does the Home Loan EMI Prepayment Calculator Work?

With Urban Money’s handy emi calculator for home loan with prepayment, you can compute values by following a minimal process that won’t even take a minute of your precious time. Here’s how this emi prepayment calculator works:

  • Visit the top section of the home loan emi prepayment calculator.
  • You will see various text fields marked as Loan Amount, Interest Rate, Tenure, Prepayment Amount, and Number of Paid EMIs.
  • Fill appropriate values in the text field and press “Enter.”
  • As a result, you will get new monthly EMIs as the principal loan amount will be reduced.

Using the above housing loan emi prepayment calculator, we have compiled a table as shown below,

Loan Amount ₹20,00,000
Original Loan Tenure 15 Years
Current Rate of Interest 8% p.a
Prepayment Amount ₹5,00,000
Number of EMI’s Paid 5
Original EMI ₹19,113
Revised EMI ₹14,264
Savings in Interest ₹3,48,575

Disclaimer: This above table is for reference only.

What are the Benefits of the Home Loan Part Payment Calculator?

Part-payment allows home loan borrowers to diminish the outstanding amount up to a significant level. This reduction in principal is reflected directly in decreased interest liabilities along with subsequent EMI reduction. A part-payment can be helpful in limiting the liabilities, especially when chosen at the right time. The home loan emi calculator with prepayment enables you to depict the profitability of the upfront payment you will make against the house loan liability.

At the same time, the part payment contributes to the overall improvement of the applicant’s credit score after the final settlement of the home loan. When you select the prepayment option, you take one more step towards easier principal amount repayment. Additionally, the charged interest rate remains in check. The best part about computing values is that you already know the exact savings you are going to unlock.

As a home loan borrower, always try to make multiple partial payments across the loan tenure to avail of maximum benefits. Banks and lenders usually allow the borrower to make part prepayments equal to the amount payable through three EMIs. In simple words, if you are paying an EMI of INR 20,000, then you are eligible to make a part payment of INR 60,000 using an emi prepayment calculator.

Who is an Eligible Candidate to Make a Home Loan Prepayment EMI?

Any home loan borrower is permitted to make full and partial prepayments towards the outstanding home loan amount. Well, there might be some restrictions that thoroughly depend upon your lender. Many lenders do not accept partial prepayments, while others do.

Thus, it is highly recommended to go through the prepayment clause mentioned within the agreement before signing the home loan agreement. If your agreement permits you to do the same, then you are eligible to make part prepayments. Don’t forget to check if the lender has imposed any charges for prepayments. It is better to know about the penalty in advance before making partial payments. Using a home loan emi calculator with prepayment can help you understand these charges better.

What are the Applicable Home Loan Prepayment Charges?

When you count on home loan prepayment, you might be liable to pay notable home loan prepayment charges. These charges are imposed based on RBI guidelines or guidelines issued by central banks. All banks and housing finance companies are bound to follow these guidelines. If you are thinking of making partial prepayments, here are certain things you must be familiar with:

When Banks & HFCs are Permitted to Charge Prepayment Penalties

  • If a non-individual borrower applies for partial prepayments, then he/she will be liable to pay a prepayment penalty.
  • Banks have the right to charge a penalty if a borrower with a fixed rate home loan makes a partial prepayment.
  • HFCs are restricted from imposing penalties on borrowers with fixed rates only if the borrower applies for another loan to put forward the prepayment.
  • If the individual who accessed a dual-rate loan decides to make a prepayment during the fixed rate tenure, then he will be liable to pay a penalty.

Note: A dual-rate loan is one in which the rate was initially fixed but after a certain time period was shifted to floating interest rates.

Cases in Which HFCs are not Permitted to Charge Prepayment Penalties

  • Banks are restricted from levying partial prepayment charges in the event of floating-rate loans.
  • HFCs are not allowed to impose a penalty if the borrower is prepaying the amount from their own funds.
  • In the event of a dual-rate loan, financial institutions are restricted from charging a penalty if the home loan is availed at floating rates. An emi calculator for home loan with prepayment can provide clarity on these penalties.

Factors to Consider Before Making Part Prepayments

It is not advisable to make part prepayments out of the blue. You need to go through a systematic procedure if you want to avail the maximum possible benefits. Certain factors account for the right time to make a prepayment.

  • The Age of the Borrower

If the applicant is near retirement age, then count on the prepayment prior to retirement. When you reach retirement, your income sources are restricted, and your expenditure might increase. There are chances that you won’t be able to make a part prepayment after getting retired.

  • Future Expenditure

When you finalise the part prepayment, don’t skip contemplating the upcoming expenses. The amount you will prepay is a huge amount and can literally exhaust all accumulated amounts. Thus, before making such payments, look into your finances and plan accordingly.

  • Tax Savings

When an applicant makes a home part prepayment, he is rolled off the list of possible tax benefits. whereas during the repayment period, you can claim a maximum tax exemption of INR 1.5 lakh on the principal component under Section 80C. Furthermore, under Section 24 (b), you can claim a maximum tax exemption of INR 2 lakh on the interest component. In the case of a joint loan, both the owners can avail the benefits of the tax exemption individually.

  • Total Savings Achieved Through Prepayment

You might have to pay a liable fee to avail yourself of the benefits of prepayment. Before you consider part prepayment, look into the applicable charges, if any, along with the overall amount you will save by making prepayment of a home loan. If you don’t make huge savings through loan prepayment, then drop the idea of prepayment. Additionally, you should consider making a prepayment in the later stages of repayment tenure as the principal component is higher. In the initial tenure, the principal component is comparatively low. A home loan emi calculator with prepayment can help you calculate these savings.

  • Investment opportunities

When you have access to a reliable amount of funds, don’t just look into prepayments. If you get other opportunities to invest the same amount and can avail more benefits through the investment, then you should consider other opportunities over prepayment of your home loan. Using an emi calculator for home loan with prepayment will help you compare these opportunities effectively.

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Frequently Asked Questions (FAQs)

Is prepayment of a home loan permissible?

A home loan has numerous advantages, such as tax benefits, which may make prepayment an unfavourable option for you. Banks and finance providers permit borrowers to make prepayments and repay home loans before the completion of the loan tenure. Moreover, you might have to pay applicable prepayment charges (if any).

How can you calculate prepayment charges?

To ease up the prepayment calculation process, you can count on the prepayment calculator. On the other hand, the prepayment charges are calculated by computing the difference between the original rate of interest and the current rate of interest. For instance, let’s say your original home loan interest rate was set at 7.5%, and at present, the applicable rate of interest is 5.5%. The difference between the two, which is 2%, is multiplied by the principal amount.
200000 x 0.02 => 4000 This will be the applicable prepayment charge levied by the lender.

What is the impact of prepayment on home loan EMI?

When your principal amount is less, you become liable to pay lower interest rates and reduced EMIS. By making home loan prepayment, you unlock the opportunity to part prepay the loan amount before the home loan’s tenure completion. It results in the reduction of interest components from monthly EMIs. Thus, with prepayment, the overall amount of home loan EMI is reduced.

What do you mean by prepayment charges for a home loan?

Home loan prepayment is the process of repaying a home loan partially before the due date. To carry forward the prepayment procedure, you might have to pay notable charges levied by the lender. That is why it is recommended to get familiar with the applicable charges while applying for a housing loan.

Do part-payments lower home loan EMIs?

Not directly, but it eventually reduces the home loan tenure. The prepayment reduces the interest amount, which indirectly has an impact on the EMI.

How to calculate the principal repayment on a housing loan?

The EMI of a home loan comprises two vital components that are principal components together with interest components. In simple words, the EMI is equal to the principal amount in addition to the interest paid on the housing loan. The monthly installment remains fixed throughout the loan tenure. To calculate the repayment principal, the paid EMIs are deducted from the principal amount along with the levied interest rate.

What is the advantage of prepaying a home loan?

The key benefit of prepaying a home loan before the due date is the reduction of interest outflow. When you rely on prepayments, you save a lot in terms of interest. With the reduction of the principal amount, the average interest rate and the initially determined payable amount decrease.

When is the right time to make prepayments?

During the initial stage of a home loan, the interest component is higher. Thus, you should count on prepayments during the initial years of a home loan. If you decide to make prepayments at a later stage, you don’t save much and end up paying more in terms of prepayment charges.

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