Prepay the home loan, or invest?
Settle the most argued question in Indian personal finance with your own numbers: does a spare rupee do more prepaying the home loan or going into equity?
Runs entirely in your browserRuns entirely on your device — nothing you type is sent anywhere. Educational only, and not investment advice.
How to use this calculator
Each step names a control you will find on screen above.
- Surplus available
The monthly amount genuinely spare after expenses, EMI and emergency fund. Not a hoped-for figure.
- Years left on the loan
The remaining tenure, not the original. This matters more than people expect, because prepayment early kills far more interest than prepayment late.
- Loan interest rate and Expected equity return
The loan rate is certain and knowable. The equity return is a guess — try 12%, then try 8%, and see whether your conclusion survives.
- I claim the home loan interest deduction
Only tick this if you are on the old regime and actually claiming Section 24. Most people on the new regime cannot, which raises the loan’s true cost and tilts the answer towards prepaying.
- Your tax slab
This affects both sides — what the deduction is worth, and what you pay on the equity gains when you eventually sell.
Worked example: ₹25,000 a month, twelve years left at 8.5%
A ₹50 lakh loan taken some years ago, 12 years remaining, rate 8.5%. You have ₹25,000 a month spare. You are on the new regime, so no Section 24 deduction.
What to enter
- Surplus available
- ₹25,000 / month
- Years left on the loan
- 12
- Loan interest rate
- 8.5%
- Expected equity return
- 12%
- I claim the home loan interest deduction
- Off (new regime)
- Your tax slab
- 30%
What it shows you
- Loan’s effective cost
- 8.5%
- Equity return after LTCG
- ≈ 10.5%
- Edge to investing
- ≈ 2 points a year
- At 8% equity instead
- prepaying wins
no deduction, so the headline rate is the real rate
12% less 12.5% tax on the gain
and only if 12% actually arrives
the conclusion flips
Where this is taught
A calculator gives you a number. These explain what the number means and when it misleads you.
- Risk & Psychology10 minHandling a windfallA bonus, an inheritance, an ESOP vesting or a property sale. Large sums arrive rarely and are mishandled reliably.
- Risk & Psychology11 minPrepay the home loan or invest?The most common financial question in India, worked through properly — including the tax regime detail that changes the answer.
- Market Basics10 minYour credit score, and why an investor should careNot a market topic, and it decides what your borrowing costs — which decides whether investing borrowed money was ever sensible.
- Market Basics11 minBefore you invest: the order of operationsFour things belong ahead of your first equity purchase. Skipping them is why most people are forced to sell at the worst possible moment.
- Risk & Psychology13 minChoosing what to sell when you need the moneyLife presents a rupee figure and a date. Which holding funds it is decided in about four minutes, usually by whichever sale feels least like an admission.