How this emi vs tenure works
The lump sum reduces outstanding principal. Scenario A re-amortises with the old EMI until payoff; Scenario B computes a new EMI across the unchanged remaining months.
Worked example
With ₹40 lakh outstanding and 180 months remaining, a ₹5 lakh prepayment shows the cash-flow relief from a lower EMI beside the potential interest benefit of faster payoff.
Try it yourself: the form above starts with these illustrative values. Change any input to see the result and chart update instantly.
Assumptions used
- The prepayment happens before the next monthly cycle.
- Any entered fee is added to the post-payment financing cost.
- The interest rate stays constant in both scenarios.
What this estimate does not cover
- Lenders may round EMI or tenure differently.
- Tax effects and the opportunity cost of the lump sum are not modelled.
Financial contracts can use day-count, rounding, reset and fee conventions that differ from this educational model. Use your lender’s official schedule for a contractual figure.
Frequently asked questions
Which option usually saves more interest?
Keeping EMI unchanged usually repays principal faster and therefore tends to save more interest.
When can lower EMI be useful?
It may improve monthly cash-flow resilience when flexibility matters more than fastest payoff.
Official references
Regulatory statements are deliberately limited and linked to primary sources. These sources were last reviewed on 3 November 2026.
- RBI: Levy of foreclosure charges / pre-payment penalty on floating-rate term loans — Banks; floating-rate term loans sanctioned to individual borrowers. Always confirm current applicability to the specific loan.
- RBI FAQ: Reset of floating interest rates on EMI-based personal loans — Communication and options around interest-rate resets; home loans fall within the RBI definition of personal loans for this framework.
- RBI consumer guidance on home loans — General borrower education on APR, fees, margin/down payment and lender comparisons. Some examples may be historical; verify lender terms.