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Prepayment & Refinance Savings

Loan Prepayment & Refinance Calculator

See exactly how much interest you'll save and how many months you'll cut off your loan by paying extra — or compare refinancing to a new interest rate, including the break-even period on closing costs.

💵 Loan & Extra Payment Details

How it works: Extra payments reduce principal beyond the scheduled EMI, so every future month's interest is calculated on a smaller balance — simulated month-by-month.

💰 Interest Saved

Enter details and click Calculate
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Disclaimer: This calculator is provided for educational and informational purposes only. Results are estimations and do not account for prepayment penalties, refinance processing fees beyond what you enter, tax implications, or lender-specific policies. Results do not constitute professional financial or mortgage advice. Consult your lender or a qualified financial advisor before making prepayment or refinancing decisions.

How Prepayment Savings Are Calculated

Every extra rupee you pay goes entirely toward reducing your outstanding principal — it isn't reduced by interest first, since your regular EMI already covers that month's interest. A smaller balance means less interest charged every month afterward, for the rest of the loan.

Step-by-Step Worked Example

A ₹40,00,000 loan at 9% for 20 years normally costs ₹46,37,369 in total interest over 240 months (EMI ≈ ₹35,989).

  1. With ₹5,000 extra every month: total interest drops to ₹32,21,399 — a saving of ₹14,15,970 — and the loan closes in 177 months instead of 240 (5.25 years earlier).
  2. With a ₹3,00,000 lump sum at month 24 instead: total interest drops to ₹36,22,091 — a saving of ₹10,15,278, closing in 204 months.

The monthly approach saves more here because the extra money starts working from month 1, while the lump sum only starts reducing interest from month 24 onward.

Refinance Worked Example

Outstanding balance ₹30,00,000, 15 years remaining, current rate 9.5%, refinance offer at 8.3%, closing costs ₹50,000:

Current (9.5%)Refinanced (8.3%)
EMI₹31,327₹29,192
Total Interest (remaining term)₹26,38,813₹22,54,477

Interest saved = ₹26,38,813 − ₹22,54,477 = ₹3,84,336. Net of ₹50,000 closing costs = ₹3,34,336 net savings. Break-even = ₹50,000 ÷ ₹2,135 monthly EMI savings ≈ 23 months — refinancing pays for itself in under 2 years.

Frequently Asked Questions

Every extra rupee of prepayment goes 100% toward reducing your principal balance, since it's on top of your regular EMI. A lower balance means less interest charged in every subsequent month, compounding into substantial savings over the remaining tenure.
A consistent extra monthly payment often saves more interest for the same total extra amount, because it reduces the balance sooner and more steadily. A lump sum is useful for a bonus or windfall — the earlier in the tenure you apply it, the more it saves.
When interest saved over your remaining tenure exceeds the closing/processing costs, and the break-even period fits your plans. Refinancing rarely pays off if you plan to close or sell the property before the break-even point.
Many floating-rate home loans (especially in India, per RBI regulations) don't charge prepayment penalties for individual borrowers. Fixed-rate and some personal/auto loans may still charge a fee — always check your loan agreement first.