Discover how much interest you save and how many months earlier you repay by making extra payments. Includes lump-sum and periodic prepayment modelling.
Every rupee you prepay reduces the outstanding principal immediately. Since interest is charged on outstanding balance (reducing balance method), a lower principal means lower interest every subsequent month — creating a compounding saving effect over time.
As per RBI circular DBOD.No.Dir.BC.27/13.03.00/2012-13, banks cannot levy foreclosure charges/pre-payment penalties on floating rate home loans. This makes prepayment completely free for majority of home loan borrowers.