Home Loan Calculator with Prepayment Options

What is a Home Loan?

A home loan is a secured loan provided by banks and financial institutions to help you purchase or construct a residential property. The property itself serves as collateral, making it one of the most affordable loan options with competitive interest rates.

EMI Formula

Where:
P = Principal loan amount
R = Monthly interest rate (annual rate / 12 / 100)
N = Loan tenure in months

Tax Benefits

• Section 24: Interest deduction up to ₹2 lakh per year
• Section 80C: Principal repayment deduction up to ₹1.5 lakh
• First-time buyers: Additional ₹50,000 under Section 80EEA
• Total benefit: Up to ₹3.5 lakh per year

Prepayment Strategy

• Early years: Maximum impact as more interest is being paid
• Yearly bonuses: Use bonuses/increments for prepayment
• Tax optimization: Balance prepayment with tax benefits
• No penalty: Most banks allow free prepayment now

Eligibility Criteria

• Age: 23-65 years (varies by lender)
• Stable income source (salaried/self-employed)
• Good credit score (750+ preferred)
• Debt-to-income ratio below 50%
• Down payment: 10-20% of property value

Tips to Reduce Interest

• Make regular prepayments, especially in early years
• Choose shorter tenure if you can afford higher EMI
• Maintain good credit score for better interest rates
• Compare rates across banks and negotiate
• Consider balance transfer if rates have dropped significantly