Home Loan Prepayment Calculator

Use home loan prepayment calculator to check the EMIs in case you wish to prepay a portion of the home loan. Basic details such as the prepayment amount, interest rate, tenure, and loan amount must be entered to calculate the EMIs. The amount of money that you will save can also be checked by using the home loan prepayment calculator.

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What is Home Loan Prepayment?

Banks and Non-Banking Financial Companies (NBFC) offer the prepayment facility on home loans, where a certain portion of the loan amount that you have availed can be repaid. Making a prepayment helps in reducing the amount that is due.

When you make a prepayment, the EMI can be kept the same and the tenure can be reduced or the tenure can be kept the same and the EMI can be reduced. You can use the home loan prepayment calculator to check the exact details.

Some of the details that must be entered to use the home loan prepayment calculator are mentioned below:

• Principal Amount: The amount of money that you have taken from the lender as a loan is the principal amount.
• Outstanding Loan Amount: The amount that you owe the lender is the outstanding loan amount.
• Balance Tenure: The number of EMIs that are pending is the balance tenure.
• Part Payment Amount: A part of the outstanding loan amount that you intend to pay is the part payment amount. The minimum part payment amount that must be paid is three times the EMI.

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Home Loan Prepayment EMI Calculator

The home loan prepayment EMI calculator is offered by various third-party websites. You will need to enter details such as the loan amount, tenure, rate of interest, and the amount you would like to pay. Once the details have been entered, you can view the revised EMI, the EMI savings, the percentage of the EMI that is being saved, and revised tenure.

How the Home Loan Prepayment Calculator Works

Let’s now look at how this tool works. We’re assuming the following numbers to illustrate this:

Loan amount (principal) = Rs.20 lakh

Tenure = 20 years

Interest rate = 9% p.a.

Using an EMI calculator, you will see that your EMI without any prepayment is Rs.17,995.

Now let’s say you make a prepayment of Rs.1 lakh. Your EMI now will be Rs.17,095. That’s a reduction of Rs.900 every month (5% EMI savings). You can also choose to keep your EMIs at Rs.17,995 and reduce your tenure.

Using this calculator can help you find out how you can pay off your loan a lot faster.

Home Loan Prepayment Rules

As per a circular that was issued by the Reserve Bank of India in 2014, there are certain prepayment rules that banks must follow. Housing Finance Companies (HFCs) have also followed similar rules.

HFCs and banks are allowed to levy prepayment penalties under the below-mentioned cases:

• Dual Rate Home Loans that are availed by Individuals: Under a Dual Rate Home Loan scheme, the rate of interest is fixed for the initial years and then a floating rate is applicable. Banks can levy a prepayment penalty under this scheme.
• Fixed Home Loan Interest Rates availed from HFCs: In case you borrow money from another HFC or bank to repay the loan, HFCs can levy a prepayment charge.
• Fixed Home Loan Interest Rates availed from Banks: In case you avail a home loan from a bank at a fixed interest rate, a prepayment charge can be levied as per the loan agreement.
• Non-Individual Borrowers: Banks and HFCs can levy a prepayment charge for non-individual borrowers.

HFCs and banks are not allowed to levy prepayment penalties under the below-mentioned cases:

• Dual Rate Home Loan with a Floating Interest Rate: In case you make the prepayment when the Dual Rate Home Loan has been shifted to a floating interest rate, no prepayment penalties can be levied.
• Prepayment is made from your Own Money: In case you make the prepayment with your own money and do not borrow from a bank of HFC, a prepayment penalty cannot be levied.
• Home Loans with a Floating Interest Rate availed by Individuals: According to the guidelines provided by the RBI, no prepayment penalties can be levied in case an individual avails a home loan with a floating interest rate.

FAQs on Home Loan Prepayment Calculator

1. What is the difference between a home loan EMI calculator and a prepayment calculator?

   A home loan EMI calculator can help you find out the monthly payments of the home loan that you are planning to avail. A prepayment calculator helps you to find the monthly payments after a certain portion of the outstanding amount has been paid. The prepayment calculator can also help you find the amount of money that can be saved.

2. What is the difference between home loan repayment and prepayment?

   Home loan repayment is when the entire loan is paid, while prepayment is when part of the outstanding amount is paid.

3. Should I make part payment on the home loan?

   Yes, part payment can help in either reducing the tenure or the EMI.

4. Does part payment reduce home loan EMI?

   Yes, part payment reduces the EMI on the home loan.

5. Who can opt for the prepayment facility?

   Any home loan borrower is eligible to opt for the prepayment facility. However, you must check with the bank if the prepayment facility is provided when you avail the home loan.