EMI Prepayment Calculator – Reduce Tenure or Reduce EMI

Loan amount (₹)

Interest rate (% per year)

Loan tenure (years)

Prepayment amount (₹)

Prepay after how many EMIs?

Prepayment charge (%)

Assumes a fixed interest rate with monthly reducing balance and one lump-sum prepayment made right after the chosen EMI. Your lender's schedule may differ slightly.

Reduce tenure or reduce EMI after a prepayment?

When you make a part-prepayment on a loan, the lender usually lets you choose one of two things. You can keep your EMI the same and finish the loan sooner, or keep the original end date and pay a smaller EMI. This calculator puts both side by side, along with the no-prepayment baseline, so you can see the interest saved and the new EMI or tenure.

How the calculation works

The EMI is P × r × (1 + r)ⁿ ÷ [(1 + r)ⁿ − 1], where r is the monthly rate and n the number of months. The tool tracks the balance month by month until the prepayment. After it, reduce tenure keeps the same EMI and counts how many months the smaller balance takes to clear. Reduce EMI recalculates the EMI on the smaller balance over the remaining months.

Worked example

Loan of ₹50,00,000 at 9% for 20 years, so the EMI is about ₹44,986 and the total interest with no prepayment is about ₹57,96,711. After 24 EMIs the outstanding balance is about ₹48,03,945, and you prepay ₹5,00,000 with no charges.

Reduce tenure: the loan ends after about 194 months (16 years 2 months) instead of 240, and you save roughly ₹16,05,555 in interest.

Reduce EMI: the tenure stays 20 years and the EMI falls to about ₹40,304, saving roughly ₹5,11,360 in interest.

Frequently asked questions

Which option saves more interest?

Reducing the tenure almost always saves much more interest, because you keep paying the same amount and clear the principal sooner. Reducing the EMI helps your monthly cash flow but saves less.

Which should I choose?

If your budget is comfortable, shortening the tenure saves more. If you need breathing room each month, a lower EMI makes sense. Some people also prepay again later to get both benefits.

Are there prepayment charges?

Banks usually do not charge individuals on floating-rate home loans, but fixed-rate loans and other loan types may. Enter the percentage in the charge field to see the net saving.

Does the earlier I prepay, the better?

Yes. Early in the loan most of each EMI is interest, so a prepayment made early cuts far more future interest than the same amount paid later.

Is this exactly what my bank will show?

It is a close estimate. Banks may round differently, change rates on floating loans, or apply the prepayment on a specific date, so check the revised schedule from your lender.

Results are estimates for information only and are not financial, tax or legal advice.