Loan Prepayment vs Invest Calculator
Got a surplus sitting idle? See whether prepaying your loan or investing the money leaves you richer.
Frequently Asked Questions
Should I prepay my home loan or invest the money?
It depends on two numbers. If your loan rate is higher than what you can reliably earn after tax, prepaying usually wins. If your expected investment return beats the loan rate by a clear margin, investing comes out ahead. This calculator does that math for you and tells you which side wins, and by how much.
Does prepaying a loan really save that much interest?
Yes, more than most people expect. When you prepay and keep the same EMI, the surplus knocks straight off the principal. That shortens the tenure and cuts years of interest. The earlier you do it in the loan, the bigger the saving, since early EMIs are mostly interest.
Why does the calculator keep my EMI the same after prepaying?
Keeping the EMI fixed and reducing the tenure saves far more interest than lowering the EMI over the same period. So that's the assumption here. You pay the same amount each month, you just finish the loan sooner.
Does this account for tax benefits on home loan interest?
No, it compares the raw interest saved against the raw investment gain. If you claim a deduction on your home loan interest, or your investment return is taxed, adjust the rates a little before you decide. The verdict here is a strong starting point, not the final word.