Keep emergency cash before either choice.
Prepay vs Invest Calculator
Compare using a lump sum for loan prepayment versus investing it. Adjust the assumptions, inspect the chart and read the complete guide below.
02 Your projection
Investing leads by₹12.22 LUpdates instantly as you edit
Prepayment value at horizon₹8.86 L
After-tax investment value₹21.08 L
Estimated loan interest avoided₹3.86 L
Cost comparisonCurrent versus proposed
MeasureCurrentAfter change
Starting lump sum₹5,00,000₹5,00,000
Benefit at horizon₹3,86,266₹16,08,451
Total value₹8,86,266₹21,08,451
Projection journeyHover to inspect a year
Investment return is uncertain while interest avoided is tied to the loan contract. Liquidity, tax timing, deductions, risk and lender treatment matter.
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Five smart nudges
Use the result with context.
Compare after-tax return with interest avoided.
Investment return is uncertain; loan terms are contractual.
Confirm whether prepayment reduces EMI or tenure.
Use partial prepayment when flexibility matters.
Understanding Prepay vs Invest in India
Editorially reviewed 13 July 2026 · Rules and assumptions can change
Compare equivalent future values
Prepayment produces a relatively certain saving linked to the loan rate and schedule. Investing produces an uncertain market outcome and tax. Comparing 8.5% loan cost directly with an 11% gross return ignores both differences.
The calculator estimates interest avoided from a revised schedule and compares it with the after-tax future value of the same lump sum.
Liquidity can outweigh the spreadsheet
A prepayment is difficult to reverse unless the loan has an offset or redraw structure. Preserve emergency cash and near-term goals before reducing debt.
Market investments remain accessible subject to volatility and tax, but relying on them to repay a fixed loan can create sequence risk.
Loan terms and tax
Verify whether the lender reduces EMI or tenure, charges prepayment and how floating-rate rules apply. Tenure reduction generally saves more interest.
Any home-loan tax benefit should be modelled only if actually eligible; paying interest solely for a deduction is not a gain.
Official sources used for this guide
Rates, thresholds and rules can change after the review date. Check the linked authority and the provider’s current documents before acting.
Prepay vs Invest calculator FAQs
Is investing better when expected return exceeds loan rate?
Not automatically; adjust for tax, risk, liquidity and return uncertainty.
Does prepayment reduce EMI or tenure?
Lender instruction matters; keeping EMI and reducing tenure often saves more interest.
Should emergency money be used?
Generally preserve an adequate liquid reserve.
Is interest saved tax-free return?
It is avoided cost, but lost deductions and personal tax circumstances can matter.