Financial Calculators
Prepay vs Invest Calculator
Every surplus rupee has two suitors: the loan and the market. See both outcomes side by side, honestly.
- Path A: interest saved by prepaying
- ₹9,98,887
- Path A: loan ends earlier by
- 70 months
- Path B: corpus if surplus is invested
- ₹50,45,760
- Current EMI (unchanged in both)
- ₹29,542
Both paths are exact simulations of the same monthly surplus. Prepaying gives a guaranteed, tax-free saving at the loan rate; investing targets a higher but market-linked outcome. Many families sensibly do some of each.
A guaranteed saving vs a probable gain
Prepaying a loan earns you the loan's interest rate, guaranteed and tax-free, and ends the loan earlier. Investing the same surplus targets a higher return, but a market-linked one. Neither answer is universally right; the numbers, and your temperament, decide.
This calculator runs both paths as exact month-by-month simulations of the same surplus over the same period, so the comparison is fair.
The two paths
Path A: pay (EMI + surplus) monthly until the loan closes\n -> interest saved, months saved\nPath B: SIP the surplus at the expected return for the base tenure\n -> corpus built (loan runs full term)Worked example: on a Rs 30,00,000 loan at 8.5% with 180 months left (EMI Rs 29,542), a Rs 10,000 monthly surplus used to prepay saves about Rs 9,98,887 of interest and ends the loan 70 months early; the same surplus invested at 12% for 180 months builds a corpus of about Rs 50,45,760.
Frequently asked questions
The corpus looks bigger than the interest saved. So investing always wins?
Not automatically. The corpus is market-linked and taxable on gains, while prepayment savings are certain and tax-free; prepaying also frees the EMI decades earlier. Compare after-tax, risk-adjusted, not just the raw numbers.
What about home loan tax benefits?
Interest deductions reduce the effective loan cost for those claiming them, tilting the case slightly towards investing. Factor your own tax position into the loan rate you enter.
Is there a middle path?
Yes, and many families take it: prepay enough to close the loan by a milestone (say retirement) and invest the rest. Discipline in both beats perfection in either.
Does prepayment attract charges?
Floating-rate loans to individuals carry no prepayment penalty. Fixed-rate loans may; check your sanction letter.
Do some of each, deliberately.
We help families split the surplus so both the loan and the goals stay on schedule.