Home Loan Prepayment Calculator – Reduce EMI or Tenure?

A prepayment calculator home loan is a tool that helps you calculate the savings you can make by prepaying a part of your home loan. The calculator considers various factors such as the outstanding principal, interest rate, and tenure of the loan, to give you an estimate of the savings you can make by making a prepayment. By using this calculator, you can make an informed decision on whether you should prepay your home loan and how much you should prepay.

How Does a Prepayment Calculator Home Loan Work?

A prepayment calculator home loan works on a simple principle of calculating the savings made by opting for a prepayment. The calculator takes into account the outstanding principal, housing loan interest rate, and tenure of the loan, and calculates the interest you would have paid on the outstanding principal if you had not made the prepayment. A prepayment calculator home loan is an excellent tool that can help you save a significant amount of money on your home loan. It then calculates the new EMI and tenure, based on the reduced outstanding principal, and gives you an estimate of the savings you can make.

For example, let’s say you have a home loan of INR 50 lakhs, with an interest rate of 8% per annum, and a tenure of 20 years. The EMI for this loan would be INR 42,242. If you make a prepayment of INR 5 lakhs in the second year of the loan, the calculator would calculate the new outstanding principal, which would be INR 45 lakhs. It would then calculate the new EMI and tenure, based on the reduced outstanding principal, which would be INR 38,038 and 17 years, respectively. The savings you would make by making this prepayment would be INR 6,203 per month and INR 12,48,000 over the entire tenure of the loan.

Final Thoughts

By using this calculator, you can make an informed decision on whether to prepay your home loan and how much to prepay. However, it is essential to consider all the factors mentioned above before making a prepayment. This will help you maximize your savings while also achieving your financial goals.