Updated 21 October 2026

Quick answer: Your loan EMI (equated monthly instalment) is P × r × (1 + r)n ÷ ((1 + r)n − 1), where P is the loan amount, r the monthly interest rate and n the number of months. A ₹50 lakh home loan at 8.5% for 20 years has an EMI of about ₹43,390 and total interest of about ₹54 lakh, more than the loan itself. Paying just ₹5,000 extra a month would clear it about 4½ years earlier and save roughly ₹14 lakh in interest. Use the free calculator below to see your own EMI and how much prepayment can save.

Monthly EMI—
Total interest (no prepayment)—
Total interest with prepayment—
Interest saved—
Loan paid off in—
Time saved—
PrincipalInterest (no prepayment)
Year-by-year schedule (with prepayment)
YearPrincipal paidInterest paidBalance at year end

Assumes a constant interest rate, with prepayments used to shorten the tenure while the EMI stays the same. Floating rates and lender charges will change the real figures.

How to Use This EMI Calculator

  1. Enter the loan amount, interest rate and tenure. The calculator shows your EMI and the total interest over the full term.
  2. Add an extra monthly payment to see how much faster you'd be debt-free and how much interest you'd save. Set it to 0 to see the loan without prepayment.
  3. Try a one-time prepayment, such as an annual bonus, and choose the year you'd make it.
  4. Open the year-by-year schedule to see how your payments split between principal and interest.

It works for home loans, car loans, personal loans and education loans, in any currency.

The EMI Formula Explained

EMI = P × r × (1 + r)n ÷ ((1 + r)n − 1)

  • P is the loan amount (principal)
  • r is the monthly interest rate: the annual rate ÷ 12 ÷ 100. At 8.5%, r ≈ 0.00708
  • n is the number of monthly instalments: 20 years = 240

For ₹50 lakh at 8.5% for 20 years, the EMI is about ₹43,391. Over 240 months, you'd pay about ₹1.04 crore in total, of which about ₹54 lakh is interest.

Why Early EMIs Are Mostly Interest

Interest is charged on the outstanding balance, which is highest at the start. In the first month of the example loan, about ₹35,400 of the ₹43,391 EMI goes to interest and only about ₹8,000 reduces the loan. As the balance falls, more of each EMI goes to principal. This is why prepaying early in a loan saves far more interest than prepaying near the end.

How Much Does Prepayment Save?

Using the example loan of ₹50 lakh at 8.5% for 20 years:

  • ₹5,000 extra every month: paid off in about 15½ years instead of 20, saving roughly ₹14 lakh in interest.
  • ₹10,000 extra every month: paid off in about 13 years, saving roughly ₹22 lakh.
  • A one-time ₹5 lakh prepayment in year 3: saves roughly ₹14.5 lakh and cuts more than 3½ years.

Try these in the calculator and compare them with your own loan.

Prepay the Loan or Invest the Money?

This is one of the most common personal finance questions. Some guidelines:

  • Prepaying gives a guaranteed "return" equal to your loan interest rate, with no market risk.
  • Investing may earn more over the long term, especially in equity, but with no guarantee.
  • Tax matters. In India, home loan interest and principal may qualify for deductions under certain tax rules, which lowers the effective cost of the loan. Check the current rules for your tax regime.
  • Peace of mind counts. Many people value being debt-free, especially before retirement.
  • Keep an emergency fund first. Don't put every spare rupee into prepayment and leave yourself with no savings.

A common middle path is to split surplus money between prepayment and investing.

Other Ways to Reduce Your Loan Cost

  • Negotiate or switch lenders if your rate is well above current market rates. Balance transfers can save money but check fees.
  • Increase your EMI as your income grows.
  • Choose the shortest tenure you can comfortably afford.
  • Understand fixed vs floating rates. Our guide to fixed vs floating interest rates explains the trade-offs.

Frequently Asked Questions

Are there charges for prepaying a home loan in India?

RBI rules don't allow banks to charge foreclosure or prepayment penalties on floating-rate home loans taken by individuals. Fixed-rate loans and other loan types may carry charges, so check your loan agreement.

Should I reduce EMI or tenure after prepaying?

Reducing tenure usually saves more interest. Reducing EMI eases monthly cash flow. This calculator assumes you keep the EMI and reduce the tenure.

Does the calculator handle floating rates?

It assumes a constant rate. If your rate changes, re-run the calculator with the new rate and the remaining balance and tenure.

What is a good EMI-to-income ratio?

Many lenders and planners suggest keeping total EMIs below about 40% to 50% of take-home pay, and lower is more comfortable.

Related Guides

This calculator is for education only and isn't personalised financial advice. Your lender's figures may differ slightly because of rounding, fees and rate changes.