Home loans are big-ticket loans with the loan amount running into lakhs or crores. Thus, home loan EMIs inevitably turn out to be a hefty amount and consume a significant portion of one’s monthly income. Most home loan borrowers, therefore, try and become debt-free as quickly as possible by either prepaying their loan partially or completely.
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To prepay the loan amount, there are a few things to keep in mind. To start with, talk to the lender and get clarity on whether or not they allow prepayment and if they do, if there is a penalty involved. Further, home loan prepayment either leads to reduced home loan EMIs or a reduced home loan tenor. If a borrower wants to become debt-free quickly, they can ask their lender to reduce the loan tenor instead of reducing loan EMIs. However, if the current home loan EMIs are difficult to repay then they can have the EMIs reduced.
Home loan prepayment is a highly beneficial facility that almost every lender offers these days. If you are planning to opt for prepayment, use a home loan prepayment calculator. Let us now try and learn a bit more about this handy tool.
What is a Home Loan Prepayment Calculator?
A home loan prepayment calculator is an online tool that home loan borrowers can use to calculate the total interest they will save as well as know their new loan tenor or EMIs if they decide to prepay their loan. Using the home prepayment calculator is easy. To calculate the total interest that can be saved through a home loan prepayment, share the following information:
1. Enter the outstanding loan amount or the loan amount that is yet to be repaid.
2. Enter the loan tenor.
3. Key in the home loan interest rate at which you are repaying your home loan.
4. Finally, enter the amount that you wish to prepay.
5. Click on calculate and the home loan prepayment calculator will give you your EMIs.
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Please keep in mind that home loan prepayment calculators also vary from lender to lender. For instance, some home loan prepayment calculators are more detailed. They not only tell a borrower the total interest they will save through a home loan prepayment but also give borrowers their new loan tenor if they decide to have the prepayment reflected in their tenor, or their new EMIs if they decide to have their home loan prepayment affect their EMIs. The home loan prepayment calculator is easy to use.
How Home Loan Prepayment Calculator Can Help You Become Debt-free Sooner
1. A home loan prepayment calculator gives borrowers their new EMIs after loan prepayment. Thus, if you are planning to prepay your loan to benefit from lower EMIs, a home loan prepayment calculator will help you figure out the exact amount you must pay to help bring your home loan EMIs within the range you want.
2. If you are prepaying your loan to become debt-free quickly, the home loan prepayment calculator will tell you exactly by how many months will your loan tenor decrease if you prepay your loan with the amount you have in mind. If you are happy with your new loan tenor, you can go ahead and prepay your home loan. However, if you want to reduce your loan tenure further, the home loan prepayment calculator will help you calculate the exact amount you must prepay to become debt-free as quickly as you want.
3. Lastly, the home loan prepayment calculator is quick and accurate. It can be used multiple times to understand how different payment amounts will affect the repayment tenor and the total interest payout on the loan. Further, it is free to use.
Final Words
The home loan prepayment calculator is a useful tool that every home loan borrower planning to prepay their loan can use.
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Prepayment calculators are easily available on the internet and one can use them as many times as one likes without paying any fee. So, if you are planning to prepay your loan, make use of this calculator — it may help you make the right decisions regarding loan prepayment.
