You have been paying your EMI every month. On time, without fail. And somewhere in the back of your mind, you know you should probably be doing something more, prepaying, maybe. You have told yourself you will start when you have a proper lump sum ready. ₹50,000. ₹1 lakh. Something that feels significant enough to actually matter.
Here is what that wait is costing you.
₹100 a day, ₹3,000 a month, saves between ₹7.90 lakh and ₹32.83 lakh on a home loan, depending on your loan size, rate, and remaining tenure. Every number on this page is verified against the same reducing balance formula your bank uses. The Optimize calculator shows your exact number in under 30 seconds. No sign-up needed.
Use the calculator now. Enter your loan, see your number.
Here is exactly what to enter:
- Loan amount — your current outstanding balance, not your original loan amount. Find it on your last bank statement or in your bank app under Home Loan → Account Details.
- Interest rate — your current rate. Check your loan statement; it will show something like 8.5% p.a.
- Remaining tenure — how many years are left, not your original tenure.
- Daily prepayment amount — type 100. This is ₹100/day, which the calculator converts to ₹3,000/month.
Hit calculate. The number that appears is your total interest saved and the years cut from your loan if you start a standing instruction of ₹100/day from today.
No sign-up needed to see the result. If you want to save your report and get a detailed breakdown, enter your email at the next step.
What ₹100/day actually does to your loan
When ₹3,000 hits your loan account as a standing instruction, it reduces your principal the same day, lowering the balance on which next month's interest is calculated. That reduced interest means more of next month's EMI goes toward principal. Which reduces interest further the month after. And so on, every month, compounding forward for the rest of the loan.
The same mechanism that works against you as a borrower now works for you instead.
Here is what ₹100/day saves across five loan sizes. Every number is verified.
| Loan amount | Rate | Remaining tenure | Interest saved | Years cut |
|---|---|---|---|---|
| ₹25 lakh | 8.5% | 20 years | ₹7.90 lakh | 5.1 years |
| ₹40 lakh | 9.0% | 25 years | ₹16.67 lakh | 5.8 years |
| ₹50 lakh | 8.5% | 25 years | ₹16.13 lakh | 4.8 years |
| ₹60 lakh | 9.5% | 30 years | ₹32.83 lakh | 6.8 years |
| ₹75 lakh | 8.75% | 25 years | ₹18.62 lakh | 3.5 years |
Pro tip. The ₹60L loan saves ₹32.83 lakh, nearly double what the ₹40L loan saves, from the same ₹100/day. A higher rate (9.5%) combined with a longer tenure (30 years) creates far more compounding interest to eliminate. Your loan size alone does not determine your savings. Rate and remaining years together do.
When you start matters more than how much you put in
Most people think prepayment is about the amount. More in, more saved. That is true, but only half the picture. The other half is when.
On a ₹50 lakh loan at 8.5% over 25 years, here is what the same ₹1 lakh saves depending on which year you prepay it.
| Year of prepayment | Interest saved on ₹1 lakh | Multiplier |
|---|---|---|
| Year 1 | ₹6.19 lakh | 6.19× |
| Year 3 | ₹5.13 lakh | 5.13× |
| Year 5 | ₹4.21 lakh | 4.21× |
| Year 10 | ₹2.47 lakh | 2.47× |
| Year 15 | ₹1.29 lakh | 1.29× |
| Year 20 | ₹0.51 lakh | 0.51× |
Same loan. Same ₹1 lakh. More than twelve times the difference in impact between Year 1 and Year 20.
A rupee prepaid in Year 1 eliminates principal that would have accumulated interest for 24 more years. By Year 20, only 5 years remain; the runway is almost completely gone. The bank has already collected most of what it was going to earn from you.
If you are in the first five years of your loan right now, this is the highest-leverage window you will have. Every month of delay slides that multiplier lower.
Warning. At Year 10, the multiplier has already dropped from 6.19× to 2.47×. Prepayment still saves ₹2.47 lakh on every ₹1 lakh you put in — that is real money. But the earlier you act, the harder each rupee works.
For the full breakdown of how front-loaded interest erodes prepayment power over time: How does home loan interest work in India?
“I was waiting until I had ₹1 lakh to prepay.”
The most common reason people have not started is that they accumulate first, then act. It feels disciplined. The numbers say otherwise.
Take Ananya. ₹40L loan, 9%, 25 years remaining, EMI ₹33,568.
Without any prepayment, she pays ₹60.70 lakh in total interest over 25 years.
With ₹3,000/month as a standing instruction from Month 1, she pays ₹44.03 lakh in total interest, and her loan closes in 19.2 years, not 25.
She saves ₹16.67 lakh and gets 5.8 years of her life back. From ₹3,000 a month. Money she already has sitting idle at month-end.
Every month that ₹3,000 sits in a savings account earning 3–4% instead of hitting her principal, the bank earns 9% on that same balance. That gap, compounded across months and years, is what grows into ₹16.67 lakh.
The lump sum is not wrong. The sequence is wrong. Set up the standing instruction today. When a bonus or tax refund arrives, prepay that on top. Both working together is what moves the number significantly.
Pro tip. ₹3,000/month from Month 1 always beats ₹36,000 sent as a lump sum at year-end, even though the total is identical. Every earlier payment has more months of compounding to work through. The standing instruction wins every time.
Prepayment is free — the rule your bank hopes you never find out
The most common reason people do not prepay is the belief that the bank will charge them.
It will not, not on a floating-rate loan.
The Reserve Bank of India (Pre-payment Charges on Loans) Directions, 2025, effective 1 January 2026, explicitly prohibits all banks, NBFCs, and regulated lenders from charging prepayment or foreclosure penalties on floating-rate loans taken by individuals for non-business purposes. No exceptions. The rule applies irrespective of the source of funds used for prepayment, whether repayment is partial or full, and without any minimum lock-in period.
This builds on the original 2012 direction, RBI/2011-12/589 (DBOD.No.Dir.BC.107/13.03.00/2011-12, dated 5 June 2012), which first banned prepayment charges on floating-rate home loans. The 2025 Directions replace all earlier circulars and extend the protection further.
If a bank representative mentions a prepayment charge, ask them to name the specific RBI directive that permits it for a floating-rate individual borrower. They will not be able to, because no such provision exists.
Fixed-rate loans may still carry prepayment charges. Floating-rate loans cannot. Check your sanction letter; if it says floating rate, variable rate, or repo-linked, you prepay for free.
How to set it up in 15 minutes
One setup. Runs automatically every month. No further action needed. After you have seen your number in the calculator, go to your bank's app.
SBI YONO
Menu → Loans → Home Loans → your account → Part Payment → Schedule recurring payment
HDFC NetBanking
Loans → My Loans → your home loan → Part Payment → Set Up Standing Instruction
ICICI iMobile Pay
Home → My Products → Loans → Home Loan → Extra EMI Payment → set as recurring
Axis Mobile
My Accounts → Home Loan → Loan Details → Pay Prepayment → Schedule Monthly
Set the amount. Set the date 3–4 days after your regular EMI date so the accounts do not conflict. Confirm. Done.
After the first month, check your loan statement. The outstanding principal should have dropped by more than the regular monthly principal component. If it has, it is working.
Frequently asked questions
How does the Optimize prepayment calculator work?
Enter your outstanding loan amount, current interest rate, remaining tenure, and your daily prepayment amount. The calculator adds your monthly prepayment to your regular EMI, runs the revised reducing balance amortisation schedule forward, and shows total interest saved and your new loan closure date. All calculations use the reducing balance method, the standard mandated by RBI for all scheduled banks in India.
Is there any charge for prepaying my floating-rate home loan?
Zero. For home loans sanctioned or renewed on or after January 1, 2026, zero prepayment charges apply, covering all banks, NBFCs, and HFCs, with no lock-in period and no restriction on the source of funds, under the RBI Pre-payment Charges on Loans Directions, 2025. If your loan was sanctioned before January 1, 2026, check your original sanction letter; your old terms apply.
Should I reduce EMI or reduce tenure when I prepay?
Always choose tenure reduction. It eliminates future payments entirely rather than just shrinking them, which saves significantly more total interest. Choose EMI reduction only if you are under genuine monthly cash flow pressure and need the immediate breathing room.
What if I can only afford ₹50/day instead of ₹100?
₹50/day is ₹1,500/month. Enter 50 in the daily field of the calculator, and it shows your specific savings, which range from ₹5 lakh to ₹10 lakh, depending on your loan. The compounding starts from day one, regardless of the amount. Starting with ₹1,500/month today and increasing it later is far better than waiting until you can afford more.
How is Optimize different from my bank's prepayment calculator?
Bank calculators model one-time lump-sum prepayments. The Optimize calculator models systematic daily micro-prepayments, and when you are ready, Optimize automates the actual prepayment through a UPI standing instruction to your loan account. No manual transfer needed every month.
Summary
- ₹100/day saves ₹7.90 lakh to ₹32.83 lakh depending on your loan size, rate, and tenure. The standing instruction cannot wait. The lump sum can.
- ₹1 lakh prepaid in Year 1 saves ₹6.19 lakh. The same ₹1 lakh in Year 20 saves ₹0.51 lakh. Start as early as possible.
- Floating-rate home loans: zero prepayment charges under the RBI Pre-payment Charges on Loans Directions, 2025. Your bank cannot legally charge you.
- The Optimize calculator is free. Enter your loan details, see your number in 30 seconds, no sign-up needed.
Your loan. Your number.
See what you save in 30 seconds.
Enter your loan in the calculator above. In half a minute you get your exact interest saved, EMIs reduced, and the better choice between cutting tenure or cutting EMI.
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