Prepay your loan, or invest the money?
Compare both on your own loan and assumptions, measured at the loan's original end date.
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How the two paths are compared
Prepaying keeps your EMI the same and shortens the loan. Once the loan closes, the EMI you no longer pay is invested each month until the original end date. Investing puts the same amount to work now and lets it grow until the original end date. Both are measured on the same date, after tax on investment gains. In the old regime, the lost interest deduction under section 22 (up to ₹2 lakh a year on a self-occupied house) is included.
Worked example
A ₹50 lakh loan at 8.5% with 20 years left has an EMI of about ₹43,391. Prepaying ₹5 lakh saves about ₹17.6 lakh of interest and ends the loan about 4 years and 4 months early.
Common questions
How does this compare the two choices?
Both paths are measured at the loan’s original end date. Prepay: the loan closes early and the EMI you no longer pay is invested each month. Invest: the amount is invested now and grows until the original end date. Investment gains are taxed at the rate you choose.
Does the home loan tax benefit change the answer?
In the old regime, interest on a self-occupied house is deductible up to ₹2 lakh a year under section 22, which lowers the loan’s real cost. The new regime does not allow this for a self-occupied house.
Should I reduce the EMI or the tenure?
This tool keeps the EMI the same and shortens the loan, which usually saves more interest. Lowering the EMI instead frees cash each month.
For education and comparison only, based on your inputs and assumptions. Returns are not guaranteed and investments carry risk. Not investment advice.