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Bankbazaar Home Loan Prepayment Calculator

EMI Calculation Formula:

\[ PMT = P \times \frac{r \times (1 + r)^n}{(1 + r)^n - 1} \]

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years
INR

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1. What is Home Loan EMI?

EMI (Equated Monthly Installment) is the fixed payment amount a borrower makes to a lender at a specified date each calendar month. It consists of both principal and interest components.

2. How Does Prepayment Affect EMI?

The prepayment reduces your principal amount, which in turn reduces either your EMI amount or loan tenure. This calculator shows how prepayment affects your EMI.

\[ PMT = P \times \frac{r \times (1 + r)^n}{(1 + r)^n - 1} \]

Where:

Explanation: The formula calculates the fixed payment needed to pay off a loan over its term, accounting for compound interest.

3. Current Interest Rates

Details: As of 2024, home loan interest rates in India vary by lender (e.g., SBI at 8.40%, HDFC at 8.75%, ICICI at 8.85%). Rates depend on credit score, loan amount, and tenure.

4. Using the Calculator

Tips: Enter principal amount in INR, annual interest rate (%), loan term in years, and optional prepayment amount. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: How does prepayment affect my loan?
A: Prepayment reduces either your EMI or loan tenure by decreasing the principal amount on which interest is calculated.

Q2: Are there prepayment charges?
A: Most lenders allow partial prepayments up to 25% of outstanding per year without charges, but terms vary by lender.

Q3: Should I reduce EMI or tenure with prepayment?
A: Reducing tenure saves more interest overall, while reducing EMI improves monthly cash flow.

Q4: How often can I make prepayments?
A: Typically allowed once per quarter or year, depending on your loan terms.

Q5: Is prepayment better than investing?
A: Compare your loan interest rate with expected investment returns. Prepayment gives a guaranteed return equal to your loan rate.

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