Full explanation
When you prepay a home loan (partial prepayment), the amount goes entirely to principal reduction. The bank recalculates your EMI or tenure. Reducing tenure saves more interest than reducing EMI for the same prepayment amount. Best time to prepay: early in the loan (when outstanding is high and interest is the largest share of EMI). Even ₹1 lakh prepaid in year 2 of a 20-year ₹50 lakh loan can save ₹3–5 lakh in interest. RBI guidelines: banks cannot charge foreclosure/prepayment fees on floating rate home loans from individuals. Use the loan prepayment calculator to see your specific savings.