How much do you save by prepaying ₹1 lakh on a ₹30 lakh home loan?
Prepaying ₹1 lakh after 24 EMIs on a ₹30 lakh home loan at 8.5% over 20 years saves ₹3.34 L of interest (10.3%) and clears the loan 1 yr 4 mo earlier.
- Interest saved
- ₹3.34 L (good)
- 10.3% of the original interest
- Loan ends sooner by
- 1 yr 4 mo (good)
- 16 fewer EMIs of ₹26,035
- Saved per ₹1 prepaid
- ₹3.34
- 3.5% of the ₹28.75 L owed
- Total interest now
- ₹29.14 L
- was ₹32.48 L
- If you cut the EMI instead
- ₹25,129
- Saves ₹95,421 of interest
Open the Loan Prepayment Calculator with these numbers filled in
The numbers in charts
What the prepayment changes
- Original loan
- With prepayment
Show the numbers
| Measure | Original loan | With prepayment | Difference |
|---|---|---|---|
| Total interest | ₹32.48 L | ₹29.14 L | Saves ₹3.34 L (10.3%) |
| Total payout | ₹62.48 L | ₹59.14 L | Saves ₹3.34 L (5.4%) |
| Time to clear the loan | 20 yrs | 18 yrs 8 mo | Saves 1 yr 4 mo (6.7%) |
Original loan: principal versus interest
- Principal₹30 L · 48%
- Interest₹32.48 L · 52%
Show the numbers
| Part | Value | Share |
|---|---|---|
| Principal | ₹30 L | 48% |
| Interest | ₹32.48 L | 52% |
Balance still owed, year by year
- Original loan
- With prepayment
Show the numbers
| Loan year | Original loan | With prepayment |
|---|---|---|
| 0 | ₹30 L | ₹30 L |
| 1 | ₹29.4 L | ₹29.4 L |
| 2 | ₹28.75 L | ₹27.75 L |
| 3 | ₹28.05 L | ₹26.96 L |
| 4 | ₹27.28 L | ₹26.09 L |
| 5 | ₹26.44 L | ₹25.15 L |
| 6 | ₹25.53 L | ₹24.12 L |
| 7 | ₹24.53 L | ₹23.01 L |
| 8 | ₹23.45 L | ₹21.79 L |
| 9 | ₹22.28 L | ₹20.47 L |
| 10 | ₹21 L | ₹19.03 L |
| 11 | ₹19.6 L | ₹17.46 L |
| 12 | ₹18.09 L | ₹15.76 L |
| 13 | ₹16.44 L | ₹13.9 L |
| 14 | ₹14.64 L | ₹11.88 L |
| 15 | ₹12.69 L | ₹9.68 L |
| 16 | ₹10.56 L | ₹7.29 L |
| 17 | ₹8.25 L | ₹4.68 L |
| 18 | ₹5.73 L | ₹1.85 L |
| 19 | ₹2.98 L | ₹0 |
| 20 | ₹0 | ₹0 |
When you prepay ₹1 lakh matters
The same cheque saves less every year you wait, because the balance and the interest on it are shrinking anyway.
| When | Balance owed then | Interest saved | Share of all interest | Loan ends sooner by |
|---|---|---|---|---|
| After 12 EMIs (year 1) | ₹29.4 L | ₹3.7 L | 11.4% | 1 yr 6 mo |
| After 24 EMIs (year 2) | ₹28.75 L | ₹3.34 L | 10.3% | 1 yr 4 mo |
| After 60 EMIs (year 5) | ₹26.44 L | ₹2.41 L | 7.4% | 1 yr 1 mo |
| After 120 EMIs (year 10) | ₹21 L | ₹1.27 L | 3.9% | 8 mo |
Other prepayment amounts on the ₹30 lakh loan
Savings grow almost in line with the amount prepaid, so the per-rupee column barely moves.
| Prepayment | Interest saved | Saved per ₹1 prepaid | Share of all interest | Loan ends sooner by |
|---|---|---|---|---|
| ₹50,000 | ₹1.74 L | ₹3.47 | 5.3% | 8 mo |
| ₹1 lakh | ₹3.34 L | ₹3.34 | 10.3% | 1 yr 4 mo |
| ₹2 lakh | ₹6.23 L | ₹3.11 | 19.2% | 2 yrs 7 mo |
| ₹3 lakh | ₹8.74 L | ₹2.91 | 26.9% | 3 yrs 9 mo |
Balance and interest, year by year
The prepaid loan drops below the original after year 2 and reaches zero while the original loan is still running.
| Loan year | Balance owed (no prepayment) | Balance owed (prepaid) | Interest paid in year (no prepayment) | Interest paid in year (prepaid) |
|---|---|---|---|---|
| 1 | ₹29.4 L | ₹29.4 L | ₹2.53 L | ₹2.53 L |
| 2 | ₹28.75 L | ₹27.75 L | ₹2.47 L | ₹2.47 L |
| 3 | ₹28.05 L | ₹26.96 L | ₹2.42 L | ₹2.33 L |
| 5 | ₹26.44 L | ₹25.15 L | ₹2.29 L | ₹2.18 L |
| 8 | ₹23.45 L | ₹21.79 L | ₹2.04 L | ₹1.91 L |
| 10 | ₹21 L | ₹19.03 L | ₹1.84 L | ₹1.68 L |
| 12 | ₹18.09 L | ₹15.76 L | ₹1.61 L | ₹1.42 L |
| 15 | ₹12.69 L | ₹9.68 L | ₹1.17 L | ₹92,543 |
| 17 | ₹8.25 L | ₹4.68 L | ₹80,888 | ₹51,955 |
| 18 | ₹5.73 L | ₹1.85 L | ₹60,423 | ₹28,932 |
| 19 | ₹2.98 L | ₹0 | ₹38,149 | ₹5,500 |
| 20 | ₹0 | Cleared | ₹13,906 | ₹0 |
Questions about this scenario
How much interest do I save by prepaying ₹1 lakh on a ₹30 lakh home loan?
About ₹3.34 L if you prepay after 24 EMIs on a 20-year loan at 8.5% and keep the EMI of ₹26,035. That is 10.3% of the interest you would otherwise pay, and the loan ends 1 yr 4 mo earlier. Total interest falls from ₹32.48 L to ₹29.14 L, so you skip 16 EMIs.
Should I cut the EMI or the tenure after prepaying ₹1 lakh on ₹30 lakh?
Cutting the tenure saves more interest: ₹3.34 L against ₹95,421 if you cut the EMI to ₹25,129. Cutting the EMI frees ₹906 a month. Choose the tenure if the current EMI is comfortable, and the EMI if cash flow is tight.
Is it better to prepay ₹1 lakh early or late on a ₹30 lakh loan?
Early is better. Paid after 12 EMIs, ₹1 lakh saves ₹3.7 L; after 24 EMIs ₹3.34 L; after 120 EMIs only ₹1.27 L. The balance, and the interest charged on it, is highest at the start of the loan, so each year of waiting removes part of the benefit.
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What the numbers say about prepaying ₹1 lakh on ₹30 lakh
On a ₹30 lakh loan at 8.5% over 20 years, the EMI is ₹26,035 and the interest over the full term is ₹32.48 L, 52% of everything you would pay back. In the first year, 81% of your EMIs is interest; principal only overtakes interest from EMI number 143.
After 24 EMIs you still owe ₹28.75 L, so ₹1 lakh clears 3.5% of it. Each rupee prepaid saves about ₹3.34 of interest over the life of the loan, so ₹3.34 L (10.3% of the original interest) stays with you. With the EMI unchanged, the loan ends 1 yr 4 mo early, after 18 yrs 8 mo instead of 20 yrs; that is 16 EMIs you never pay.
You can instead keep the 20-year term and cut the EMI to ₹25,129, ₹906 a month less. That saves ₹95,421 of interest, 29% of what shortening the tenure saves, in return for easier monthly cash flow.
Timing is the biggest lever. The same ₹1 lakh paid after 12 EMIs saves ₹3.7 L; after 120 EMIs it saves ₹1.27 L. Doubling the amount to ₹2 lakh saves ₹6.23 L, 1.86 times as much, so there is no bonus for a bigger cheque beyond the extra principal it removes.
Prepaying earns a known return equal to your loan rate of 8.5%, with no market risk, less any home-loan interest deduction you give up. Whether to prepay, invest or keep the money as an emergency fund depends on your tax position, other debts and appetite for risk. Check your sanction letter for charges and note that a floating rate can change these figures.