Prepay your home loan, or invest the money?
Same money, two paths. One cuts your loan; the other grows in a fund or FD. Compare where you end up after tax, and see the return your investment must beat to win.
Prepay: loan closes in
Prepay: interest saved
Wealth if you prepay
Wealth if you invest
Have more than one loan? Before choosing between investing and prepaying, know which loan to prepay. The EMI-Free Date Planner ranks your loans, checks your emergency fund first, and shows your exact EMI-free month.
See the planner · ₹199A banker's notes before you decide
- Prepaying is a guaranteed return. Every rupee you prepay earns exactly your loan rate, tax-free, every year. A fund's 12% is a long-run average, not a promise: some 5-year stretches have returned far less. Compare your fund's realistic return with the break-even figure above, not the best case.
- Emergency fund first. Keep about six months of expenses (including EMIs) in a savings account or liquid fund before doing either. Money you prepay is hard to get back if you lose your job or face a medical bill.
- You don't have to pick one. Many borrowers split: some to the loan for certainty, some to SIPs for growth. Try half the amount in each box to see the middle path.
- Old tax regime? Interest on a self-occupied home loan is deductible up to ₹2 lakh a year, which lowers your loan's real cost. Prepaying shrinks that benefit, and this calculator accounts for it.
- Prepaying a floating-rate home loan costs nothing under RBI rules. Ask the bank to reduce your tenure, not your EMI, unless you need the monthly cash.