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Reduce EMI or Tenure Calculator

Prepaying or rate changed? Reduce-EMI vs reduce-tenure side by side, plus a ready letter for your bank

Reviewed by the PaisaTools Editorial Team · Last reviewed September 2026

Your situation
₹

Principal outstanding on your latest statement — not the original loan amount

%

Your loan's current rate

months

20 yr — the remaining EMIs on your statement

₹

A bonus, an FD maturing, one extra EMI a year — any lump sum

Reducing tenure saves this much MORE interest than reducing EMI

₹5,40,024

Interest saved (tenure cut)

₹7,56,579

EMIs saved

36

EMI drop (EMI cut)

₹1,736

Every option, side by side

OptionEMILoan ends inTotal interest
No prepayment₹26,03520 yr₹32,48,327
Reduce EMI₹24,29920 yr₹30,31,772−₹2,16,555
Reduce tenure₹26,03517 yrlast EMI ₹6,705₹24,91,748−₹7,56,579

Month-by-month on the reducing balance, the way banks compute it. Interest only — no fees, insurance or tax benefit included.

Your letter to the bank

Filled in from your numbers. Replace the [brackets], then email it or hand it in at the branch — and ask for the revised schedule in writing.

Ask for

Bank ko yeh letter bhejiye: jo option aap chunte hain, wahi likhit mein maangiye.

Two moments put the same question in front of a home-loan borrower. When you prepay a lump sum, the bank asks whether to lower your EMI or shorten the loan. When the rate changes, the bank decides whether to change your EMI or move your loan's end date, and unless you ask, it often picks the end date for you.

This calculator runs every option on your own loan, month by month on the reducing balance: the EMI, when the loan ends, and the total interest, side by side. Then it writes the letter to your bank asking for the option you choose.

For the full repayment schedule, use the EMI calculator. Wondering whether to prepay at all or invest instead? Try prepay vs invest.

RBI circular on Reset of Floating Interest Rate on EMI-based Personal Loans (RBI/2023-24/55, 18 August 2023, as updated), which requires lenders to offer the choice of a higher EMI, a longer tenure or both at a reset, and to allow prepayment. Interest computed month by month on the reducing balance at rate ÷ 12.

Assumes the rate stays the same for the rest of the loan and that EMIs are paid on time. Your bank's figures can differ by a few rupees because of rounding and the day of the month it applies the prepayment. Insurance, fees and tax benefits under sections 24(b) and 80C are not included.

Is it better to reduce EMI or tenure after a prepayment?
On interest alone, reducing tenure almost always wins: your EMI stays the same, so more of every instalment goes to principal and the loan closes earlier. Reducing EMI saves less interest but frees cash every month, which matters if your budget is tight or you would invest the difference. The calculator shows the exact gap on your own loan, side by side.
Why did my home loan tenure increase when the repo rate went up?
On a floating-rate loan, many banks keep your EMI the same after a rate rise and extend the number of EMIs instead. In 2022 this stretched many 20-year loans by years. Under RBI's rules on reset of floating-rate EMI loans (RBI/2023-24/55), the bank must tell you and offer a choice: a higher EMI, a longer tenure, or a mix. Use the 'My rate changed' tab to see each option and the letter to ask for the one you want.
How do I write a letter to the bank to reduce my loan tenure?
Address it to your branch or home-loan department, quote the loan account number, state the prepayment amount and ask that it be applied to reduce the remaining tenure while keeping the EMI unchanged, and ask for the revised repayment schedule in writing. The calculator writes this letter with your numbers; replace the bracketed details and send it.
How do I ask the bank to increase my EMI instead of extending the tenure?
Write to your home-loan branch quoting the account number, the old and new interest rate, and the RBI reset circular, and ask that the revision be applied by increasing the EMI with the tenure unchanged. Choose 'My rate changed' and 'Raise EMI' above to get the letter filled in.
Are there prepayment charges on a floating-rate home loan?
For floating-rate home loans taken by individuals (not for business), RBI does not allow banks to charge prepayment or foreclosure penalties. Fixed-rate loans and loans in a business name can carry charges, so check your sanction letter.
What happens if the rate rises so much that my EMI no longer covers the interest?
Then keeping the same EMI would never repay the loan, because the balance grows each month. The calculator flags this case. Banks are expected to raise the EMI rather than let that happen; if yours offers only a longer tenure, ask for a revised EMI in writing.

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