Inputs
Investment returns are not guaranteed. Markets can fall, and can stay down for years. The return used here is an assumption, not a forecast; try lower ones to see how the answer changes.
How equity gains are taxed
- Held 12 months or less: short-term, taxed at 20% of the gain.
- Held longer: long-term, taxed at 12.5% of the gains above ₹1,25,000 in a year.
- Plus 4% cess on the tax. PPF interest is tax-free; FD and RD interest is taxed every year at your slab rate.
- This tool asks for your return after tax. For an equity fund held for years, that is lower than its return before tax: in the plot vs FD vs fund example, 10% a year before tax keeps about 9.1% a year after tax over 10 years. For a fixed deposit, it is the rate × (1 − your tax rate).
After prepaying, the bank
The loan ends sooner. Once it does, the EMI you no longer pay is invested.
Filled in for youNo yearly amount or charges unless you add them, tax on interest, inflation 6%
Verdict
Prepaying comes out ₹5.66 lakh ahead after 20 years
That is ₹1.77 lakh in today's rupees.
Investing wins if your return after tax is above 9.38% a year.
This answer uses an example loan, amount and return. Put in yours to get your own answer.
- Prepay₹28.97 lakh
- Invest₹23.30 lakh
- Interest saved by prepaying
- ₹18.42 lakh
- Loan ends
- 5 years 5 months sooner
- Return where they are level
- 9.38%
- EMI today
- ₹35,989
Both households spend the same each month; neither owes anything at the end.
Saved scenarios
What would flip the answer
Each line changes one input and holds the rest.
- Investing wins over 20 years if your return is above 9.38%Now: 8%
Not modelled: weigh these yourself
Show the workingEvery step of the sum, with the numbers above.
Show the chart and other returnsHow the gap changes month by month, and the answer if your return is 2 points lower or higher.
At other returns
Everything else as you entered it.
Show every monthThe full month-by-month table, with a CSV download.
How this works
The tool follows two households with the same money. One puts the amount into the loan and invests whatever that frees up each month: the whole EMI once the loan ends early, or the drop in EMI. The other invests the amount and keeps paying the loan as it is. Both spend the same each month. When the loan's original end date comes, neither owes anything, so the one with more invested is ahead.
Assumptions and sources
| Assumption | Value | Source | As of |
|---|---|---|---|
| Home loan rate (default) | —Not verified | typical home-loan rate, cite bank or RBI data | 2026-10-19 |
| Inflation | 6% | CapitalVerdict default assumption from project spec; user-editable, not a forecast | 2026-10-19 |
Questions
Why compare at the loan's original end date?
By then both households owe nothing, so what each has invested is its whole position. Comparing earlier would mean weighing a smaller loan against a bigger investment pot, which hides the answer.
Why does the return after tax matter so much?
Prepaying earns exactly the loan rate, with no risk and no tax. Investing has to beat that after tax to come out ahead. The tool shows the return at which the two are level.
Is the tax benefit on home-loan interest included?
Only if you enter it. Whether you can deduct interest, and up to what limit, depends on your tax regime and the rules for the year, so the tool asks for your tax rate and the limit instead of assuming them. Prepaying lowers the interest, so it can lower this benefit too.