Prepay or Invest?
Should I prepay the loan or invest the surplus?
With ₹20,000 a month spare
Investing comes out ahead
By ₹15.61L over 15 years. This is purely the arithmetic of a 12% expected return against an 8.5% loan — it says nothing about how it feels to carry debt, and market returns are not guaranteed the way interest saved is.
Option A — prepay the loan
Pay ₹49,542 instead of ₹29,542
- Loan clears in
- 6y 8m
- Interest saved
- ₹13.85L
- Corpus at year 15
- ₹85.30L
Option B — invest the surplus
Keep the loan, invest ₹20,000 monthly
- Loan runs
- 15 years
- Extra interest paid
- ₹13.85L
- Corpus at year 15
- ₹1.01Cr
Your situation
₹30.00L
8.50%
15 yrs
₹20,000
12%
What this calculation assumes
- •Prepaying is modelled as keeping the tenure flexible: the surplus is added to every EMI, the loan closes early, and the freed-up payment is then invested.
- •Investing is modelled as keeping the loan to term and investing the surplus every month.
- •Interest saved is certain; investment returns are not. The comparison is arithmetic only and ignores that difference in risk.
- •Tax deductions on home loan interest and principal are not modelled, and they can shift the answer.
- •Prepayment charges, which apply to many fixed-rate loans, are not included.
Illustrative only. These figures assume constant rates and do not predict actual returns. Markets, taxes and inflation vary. This is educational information, not financial advice — consult a SEBI-registered adviser before making investment decisions.
About this calculator
The question every borrower asks. Compare the net worth outcome of prepaying against investing the same money.