Compare two common ways a lender may apply a home-loan part payment: keep the remaining tenure and reduce the EMI, or keep the EMI and reduce the tenure. The result shows estimated interest savings after the charge entered.
What this home-loan calculator shows
- Current EMI estimate from the outstanding principal.
- Revised EMI when the remaining tenure stays unchanged.
- Revised tenure when the current EMI stays unchanged.
- Net estimated interest saved under both paths.
How the calculation works
The calculator first applies the standard monthly reducing-balance EMI formula:
Reducing-balance EMI formula
EMI = P x r x (1 + r)^n / ((1 + r)^n – 1)
It subtracts the planned prepayment from the outstanding principal. For the EMI-reduction path, it recalculates EMI over the original remaining months. For the tenure-reduction path, it keeps the original estimated EMI and simulates monthly interest and principal until the revised balance reaches zero.
The entered prepayment charge is subtracted from estimated interest savings. If tax is added separately to a lender charge, include that in your own comparison because this tool accepts only one percentage charge.
Important lender differences
The result assumes the annual interest rate stays unchanged and each month follows the same reducing-balance convention. Actual outcomes can differ because of payment dates, floating-rate resets, daily interest, prepayment effective date, minimum part-payment rules, final-instalment adjustments, and lender rounding.
Use the current principal outstanding and remaining instalments from the lender statement. Do not use the original sanctioned amount after years of repayment.
Reduce EMI or reduce tenure?
Reducing tenure usually saves more interest because the original EMI continues attacking principal faster. Reducing EMI provides more monthly cash-flow relief but normally leaves the loan running longer. The right comparison includes the emergency cash you retain, not only interest saved.
Read Paisaseed’s home loan EMI reset guide for the broader rate-reset decision.
Common questions
Does the calculator include tax benefits?
No. It does not estimate Section 24 interest deductions, principal deductions, regime eligibility, property status, or co-borrower allocation.
Can I use it for full foreclosure?
You can enter a prepayment up to the outstanding principal for a rough payoff comparison, but use the lender’s dated foreclosure statement as the contractual amount.
Why is the lender’s revised tenure different?
The lender may apply the payment on a different date, use daily interest, change the rate, or keep a different EMI. Ask for a revised repayment schedule in writing.
More calculators
Use the home loan EMI calculator for a standard repayment estimate, the loan eligibility calculator before a new application, or the salary budget calculator to test affordability.
