Home Loan Part Payment Calculator

Smart Loan Repayment Strategy

What is Home Loan Part Payment?

Home loan part payment, also known as partial prepayment, is when you pay an additional amount towards your home loan principal over and above your regular EMI. This reduces the outstanding loan amount and can either reduce your EMI or shorten your loan tenure, resulting in significant interest savings.

Benefits of Home Loan Part Payment

• Interest Savings: Reducing the principal amount means you pay less interest over the loan tenure.
• Reduced EMI: You can choose to reduce your monthly EMI amount while keeping the same tenure.
• Shorter Tenure: Alternatively, you can maintain the same EMI and reduce the loan tenure.
• Financial Freedom: Early loan closure provides financial flexibility and peace of mind.
• Better Credit Score: Regular part payments can positively impact your credit score.

How to Use the Part Payment Calculator

1. Enter Current Loan Details: Input your current loan amount, interest rate, and remaining tenure.
2. Specify Part Payment Amount: Enter the additional amount you plan to pay.
3. Choose Repayment Option: Select whether you want to reduce EMI or loan tenure.
4. View Results: The calculator shows new EMI, tenure, and total interest savings.

Part Payment vs Full Prepayment

Part payment requires a lower amount and offers high flexibility, while full prepayment closes the loan completely, providing maximum savings but requiring a larger amount upfront.

When to Make Part Payments

• Bonus or Windfall: Use annual bonuses, tax refunds, or unexpected income.
• Salary Increment: Allocate a portion of your salary increase to loan repayment.
• Early Loan Period: Part payments have maximum impact in the initial years.
• Low-Interest Investments: When loan interest is higher than investment returns.
• Financial Stability: When you have adequate emergency funds.

Part Payment Strategies

• Reduce EMI Strategy: Choose this if you want to reduce your monthly financial burden while maintaining the same loan tenure.
• Reduce Tenure Strategy: Choose this if you want to become debt-free faster while keeping the EMI constant.
• Hybrid Strategy: Some lenders allow you to reduce both EMI and tenure proportionally, providing balanced benefits.

Conclusion

Home loan part payment is a smart financial strategy that can help you save significant amounts on interest and achieve financial freedom faster. Use our part payment calculator to understand the benefits and make informed decisions about your home loan repayment strategy. Remember to maintain adequate emergency funds before making part payments and consider your overall financial goals.