Loan Prepayment Savings

• EMI is held constant at its original value
• Balanceₘ = Balanceₘ₋₁ × (1 + r) − (EMI + extra)
• Interestₘ = Balanceₘ₋₁ × r
• Saving = Interest(base) − Interest(with prepayment)

Every rupee prepaid removes all future interest that the rupee would have attracted for the remaining tenure — which is why prepaying early is dramatically more valuable than prepaying late. The engine simulates the loan month by month twice: once on the original schedule and once with the lump sum applied immediately and the extra amount added to each instalment, then compares total interest and the month the balance reaches zero.

1. 1.Original EMIP·r·(1+r)ⁿ/((1+r)ⁿ−1)₹19,988.97
2. 2.Original total interest19,989 × 180 − 2,000,000₹1,598,015
3. 3.Balance after lump sum2,000,000 − 300,000₹1,700,000
4. 4.Simulated payoffEMI + extra = 24,989/month95 months
5. 5.Interest saved1,598,015 − 657,075₹940,940

• • The lender keeps the EMI unchanged and shortens the tenure (the default for most home loans).
• • No prepayment penalty; floating-rate individual home loans carry none in India.
• • The prepayment is applied to principal on the same day it is made.

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