How the part-payment calculator works
We build your loan month by month, the same way lenders do. Each month, interest is charged on the outstanding balance at rate ÷ 12. Your EMI pays that interest first and the rest reduces the principal. When you make a part-payment, it goes entirely towards principal, so every later month is charged interest on a smaller balance.
After the part-payment, your lender will offer one of two options:
- Reduce tenure: your EMI stays the same and the loan ends earlier. This saves the most interest.
- Reduce EMI: the end date stays the same and the EMI is recalculated on the smaller balance.
The calculator compares the full schedule with and without your part-payment and shows the difference in total interest. If your loan has a prepayment charge, that is subtracted to give your net savings.
Worked example
Say you have ₹30 lakh outstanding at 8.5% with 20 years left, and you prepay ₹3 lakh right after your next EMI.
| Current EMI | ₹26,035 |
| Total interest without prepayment | ₹32,48,210 |
| Reduce tenure: interest saved | ₹10,47,472 |
| Reduce tenure: loan ends earlier by | 4 yrs 3 mos |
| Reduce EMI: interest saved | ₹3,23,081 |
| Reduce EMI: new EMI | ₹23,427 |
A one-time prepayment of 10% of the loan saves about ₹10,47,472 if you keep the EMI the same. That is 3.5× the amount you prepaid.
Assumptions
- Interest is calculated monthly on the reducing balance at a fixed rate for the remaining tenure.
- EMIs are rounded to the nearest rupee; the last EMI is adjusted so the loan closes at exactly ₹0.
- The part-payment is applied immediately after the EMI of the month you choose.
- Floating rates change over time. If your rate changes, re-run the numbers with the new rate.
- Prepayment charges, if any, are a percentage of the amount prepaid. GST is not added to them here.
Getting the most from a part-payment
- Keep an emergency fund of at least 6 months of expenses before prepaying.
- Pay off expensive debt first: credit cards and personal loans before a home loan.
- Compare with investing. If the post-tax return you can realistically earn is below your loan rate, prepaying usually wins. Try the prepay vs invest calculator.
- Get a written acknowledgement and an updated repayment schedule from your lender after each prepayment.
Frequently asked questions
Is there a charge for part-payment of a home loan?
For floating-rate home loans taken by individuals for non-business purposes, RBI does not allow banks or NBFCs to charge prepayment or foreclosure penalties. Fixed-rate loans can carry a charge, often 2% to 4% of the amount prepaid. For floating-rate business loans to individuals and small businesses sanctioned or renewed from 1 January 2026, banks and larger NBFCs can't charge either (some smaller lenders still may on loans above ₹50 lakh). Check your loan agreement or ask your lender.
When is the best time to make a part-payment?
As early as possible. Interest is charged on the outstanding balance, so a rupee prepaid in year 2 saves far more interest than the same rupee prepaid in year 15. Early in the loan, most of each EMI goes to interest.
Should I reduce my EMI or my tenure after part-payment?
Reducing the tenure (keeping the same EMI) almost always saves more interest. Reduce the EMI only if you need lower monthly outflow. Our EMI vs tenure calculator shows the exact difference for your loan.
Can I make a part-payment on a personal loan?
Yes, if your lender allows it. Floating-rate personal loans to individuals carry no prepayment charge; most personal loans are fixed-rate, where lenders often charge 2% to 5% of the amount prepaid plus 18% GST, and some allow part-payment only after 6 to 12 EMIs. Enter the charge under 'Timing, yearly prepayments & charges' to see your net saving.
What if I pay one extra EMI every six months?
Paying two extra EMIs a year cuts the tenure sharply. To estimate it here, enter two EMIs' worth as the 'Extra payment every year'. Paying half of it every six months saves slightly more, because each payment starts cutting interest earlier.
Is there a minimum part-payment amount?
Many lenders ask for a minimum prepayment, commonly one or a few EMIs' worth. Some limit how many prepayments you can make in a year. These rules vary by lender, so confirm before you pay.
Will part-payment affect my income tax benefit?
Under the old tax regime, interest on a self-occupied home loan is deductible up to ₹2 lakh a year under Section 24(b), and principal repayment counts towards the ₹1.5 lakh Section 80C limit. Prepaying reduces future interest, so it can reduce the 24(b) deduction in later years. The interest saved is usually still larger than the tax lost, but check with a tax adviser for your case.
Why is my bank's figure slightly different?
Banks may round EMIs differently, apply the prepayment on a specific date, or charge broken-period interest for the days since your last EMI. Differences are usually small. Use your lender's statement for exact figures.