Looking to make a partial prepayment against your home loan? Use the Home Loan Prepayment Calculator to find out how much you will save on interest and how it affects your home loan EMI. Simply enter the loan amount, tenure, rate of interest, instalments paid, and prepayment amount to see the results.
When you repay your loan fully or partially ahead of the scheduled tenure, it’s called prepayment of home loan. Home loan prepayment works for you when you are looking to reduce your debt burden.
Home loan prepayment usually results in either reduction in your EMI or a reduction in your home loan tenure. Either way, you save a lot on the interest when you prepay your loan.
The home loan prepayment calculator helps you determine how much you can save from prepayment. This calculator is very easy to use. All you need to do is enter a few details of the loan, including:
Once you enter these details, just click “Calculate” to view your interest savings from loan prepayment.
Any individual can make full or partial prepayment against their outstanding loan, as long as the lender allows it. There are some lenders that do not allow prepayment as it may cause losses to them.
That’s why it’s important to check the prepayment clause before you sign your home loan agreement. If allowed, you should also check if your bank is imposing any penalty for loan prepayment.
Making prepayment surely reduces your interest burden. But, at the same time, it also takes all your savings away which could be a problem during any financial emergency.
That’s where Home Saver Loans come in. Such loans like SBI MaxGain allow you to deposit your extra savings in a current account which is linked to your home loan account. Therefore, the bank will calculate your interest after deducting the balance in your current account (if any) from the outstanding principal amount. Also, you can easily withdraw your money from the current account whenever you want.
When it comes to home loan prepayment, the central bank has created some guidelines for banks and housing finance companies (HFCs). Take a look at these guidelines:
When Banks and HFCs are allowed to charge prepayment penalty:
When Banks and HFCs are NOT allowed to charge prepayment penalty:
1. Borrower’s age
If you are nearing your retirement, it’s best to make the home loan prepayment before you retire. Once you retire and have no source of income, you are more likely to default on your home loan payments.
2. Future cash requirements
You should also consider your future funds requirement before you make prepayment. Once you make home loan repayment, which is generally a huge amount, it will exhaust all your savings. Make sure you know your financial plans before you make a decision.
3. Tax savings
If you make your home loan repayment, you will not be able to avail income tax benefits. Currently, you can claim tax exemption of upto Rs 1.5 lakh per year on principal amount repayment under the Section 80C. You can also claim upto Rs 2 lakh exemption on interest paid under Section 24(b). In addition, in Union Budget 2021-22, the Finance Minister extended benefits of Section 80EEA which allows additional deduction of Rs 1.5 lakh on interest (over and above Rs 2 lakh allowed under 24b).
4. Savings from prepayment
You should consider home loan prepayment only if you stand to save enough on your interest outgo. If you are not saving any substantial amount, you could avoid home loan prepayment. For example: During the later stages of home loan, the interest component in your EMI is much lower as compared to initial years of the loan. Therefore, if you prepay the loan during the final years of the loan, you will not achieve much savings.
5. Investment opportunities
Compare the savings you will achieve from home loan prepayment with the returns on other investment opportunities you may have. If the returns are higher, then it’s better to invest your money instead of using it to prepay home loan.
As long as your home loan agreement allows, you can make full or partial prepayment on your home loan. This could help you save on your interest outgo.
Yes, when you make home loan prepayment, it either reduces your home loan tenure or it reduces your EMI amount.
Yes, all the banks allow home loan prepayment unless your agreement states otherwise. Check your home loan agreement to know the details.
If you have enough funds to repay the loan and if you do not have any other financial plans, it is best to repay the loan early. It helps you save a lot on the interest that you will be paying over the years.
Disclaimer: The information available on this site has been gathered from publicly available sources and is accurate to the best of our knowledge. However, please be aware that the rates and other offers may vary based on your profile and may be subject to change without notice. Therefore, we advise you to verify the information before applying for any loan through this website. Magicbricks accepts no liability for any loss arising from the use of the information on this website. Refer T&C for the detail.
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**This service is available in select cities only.
*These calculators are only for illustrative purposes. These figures may or may not be applicable to your particular situation. Magicbricks will not be responsible for any loss or liability arising from the use of these calculators.