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Prepayment vs Investment Calculator
Got a lump sum? Compare the interest you'd save by prepaying your home loan against what you'd earn by investing that money — factoring in post-tax returns and LTCG.
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Recommended
Invest the money
You benefit ₹9.9 Lac more by investing
Prepay Loan
Invest Instead
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After prepayment, what will your new EMI be?
Prepay or Invest — How to Decide
The decision depends on a simple comparison: is your post-tax investment return higher than your loan interest rate?If your home loan is at 8.5% and your investments consistently earn 12%+ (post-tax ~10.8%), investing wins. But there's more to consider:
- Risk tolerance: Prepayment is guaranteed savings. Investment returns are uncertain, especially equity.
- Tax benefit:Home loan interest up to ₹2 Lac/year is deductible under Section 24(b). If you're still claiming this, the effective loan cost may be lower.
- Emotional freedom:Being debt-free has psychological value that's hard to quantify.
- Partial approach: Many experts recommend a 50-50 split — prepay some, invest the rest.