EMI and prepayment
The EMI is the easy part. The figure worth looking at is the total interest — and what a few thousand rupees a month does to it.
Anything above the EMI goes straight against the principal. This is where most of the saving is.
Your EMI
₹43,391
240 monthly payments
Principal
₹50,00,000
Interest
₹54,13,879
Balance falling against what you have paid
Early EMIs are almost all interest. The balance barely moves for the first few years, which is exactly why early prepayment is worth so much more than late prepayment.
Prepay, or invest the difference?
Prepaying, and when it stops being obvious
- Extra payments are assumed to reduce the tenure, not the EMI. That is where nearly all the saving comes from. If your bank reduces the EMI instead, ask them to keep the EMI and shorten the term.
- A prepayment is a guaranteed, tax-free return equal to your loan rate. An investment must beat that after tax to be a better use of the money — and it carries risk, while the prepayment does not.
- If you claim the Section 24(b) deduction on home loan interest, your effective rate is below the headline rate, which narrows the gap.
- Floating rates change. This assumes a constant rate for the whole tenure.
Important — This calculator is an illustration based on the assumptions you enter. It is not a projection or guarantee of returns, and it does not account for exit loads, stamp duty or the taxes payable on redemption. Actual returns will differ. Please consult us before acting on any figure shown here.
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