Smart Living Finds — Master Tools Index

AI Mortgage Prepayment Savings Calculator

See the dramatic impact of making small, consistent extra payments on your mortgage. This calculator determines your **exact interest savings** and **loan term reduction** from any additional monthly contribution.

Outstanding Loan Principal (₹)

₹

Annual Interest Rate (%)

%

Original Loan Term Remaining (Years)

Extra Monthly Payment (₹)

₹

Payments Already Made (Months)

One-Time Principal Reduction Today (₹)

₹

Savings Summary

Original Monthly Payment (EMI)

₹0.00

Total Interest Saved

₹0.00

Loan Term Reduced By

0 Years, 0 Months

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The Power of Prepayment and Accelerated Amortization

The monthly payment calculation is based on the **Time Value of Money (TVM)**, where the interest is front-loaded. By making extra payments, every rupee goes directly toward reducing the principal balance, meaning the next month's interest calculation is based on a smaller loan amount. This creates an **accelerating domino effect** on your savings.

Mathematical Simulation Process

1. **Calculate Original EMI ($M$):** Use the standard annuity formula (as shown in the Amortization tool).
2. **Simulate Original Payoff:** Run a simulation without the extra payment to find the baseline total interest and total payments ($n_{original}$).
3. **Simulate New Payoff:** Run a second simulation using the new, larger monthly payment ($M + E$) and the one-time principal reduction ($P - \text{OneTime}$).
4. **Determine Savings:** Subtract the new total interest from the original total interest, and subtract the new months to payoff ($n_{new}$) from $n_{original}$.

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