Axis Bank Home Loan Prepayment Calculator – Calculate Your Savings With A Loan Prepayment

Are you planning to pay off your Axis Bank home loan ahead of schedule? If so, you may be wondering how prepaying your loan affects your finances. With the help of our Home Loan Prepayment Calculator, you can easily estimate the impact of extra payments on your loan.

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Axis Bank Home Loan Prepayment Charges

Dreaming of closing your Axis Bank home loan sooner? Good news—prepaying can slice years off your tenure and save hefty interest. But before you click that ‘pay now’ button, let’s chat about the small fee that tags along. Here’s everything you need to know about prepayment charges before signing off.

Interest Rate Type	Pre Payment Charges
Fixed Interest Rates	2% of the Outdtanding Principal Amount
Floating Interest Rates	NA

Suggested Read: Axis Bank Home Loan Statement Download

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Axis Bank Home Loan Prepayment Rules

Rule Set	Key Provisions
1. Payment limits (online part-payment)	• Minimum amount — 2% of outstanding principal • Maximum amount — 75% of outstanding principal
2. When online part-payment is not allowed	• Loan is only partially disbursed • First EMI has not yet begun • Any overdue exists on the loan account • Payment falls on the EMI due-date or within 5 days before/after it → Pay either more than 5 days before or more than 5 days after the due date
3. Operational restrictions	• Only one online part-payment per financial year • Only one successful transaction per day • After using the single online quota, further part-payments must be made at the nearest Axis Bank Loan Centre
4. Charges & appropriation	• If part-payment charges apply, the bank first deducts the fee and applicable GST; the remaining amount is then adjusted against the principal

Suggested Read: Axis Bank Home Loan Customer Care

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Axis Bank Home Loan Prepayment Eligibility Criteria

If you’re a Axis Bank home loan borrower, here’s what you need to know about eligibility for prepayment:

Eligibility Criteria	Details
Primary Borrower	Eligible to make the prepayment.
Joint Home Loan	Co-applicants can also make the prepayment if the loan is in their name.
Account Status	Account should be free of defaults or overdue payments. Prepayment is allowed only with a consistent repayment track record.

Suggested Read: Axis Bank Home Loan Customer Care

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How Does Axis Bank Home Loan Prepayment Calculator Work?

To calculate the impact of prepayment on your home loan, the formula involves adjusting the remaining principal and recalculating either the loan tenure or the EMI. The formula is:

Remaining Principal = (Remaining Principal – Prepayment Amount) × (1 + i/n)^(n × t)

Where:

• Remaining Principal: The remaining loan amount after accounting for the prepayment.
• Prepayment Amount: The extra payment made towards the loan over and above the regular EMI.
• i: The annual interest rate on the home loan.
• n: The number of times the interest is compounded per year (usually 12 for monthly compounding).
• t: The remaining term of the loan in years.

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Home Loan Prepayment Case Study

Mr. Ram, a resident of Mumbai, took a home loan from Axis Bank to purchase a property. He opted for a loan amount of ₹50,00,000 at an interest rate of 9.75% p.a., with a loan tenure of 30 years.

His monthly EMI was ₹42,958. Over the years, Mr. Ram diligently paid his monthly installments. After 15 years of repayment, he decided to make a prepayment of ₹5,00,000 to reduce his loan burden and save on interest payments. Below is an analysis of how this prepayment impacted his loan status.

Category	Details
Loan Amount	₹50,00,000
Rate of Interest	9.75% p.a.
Tenure	30 years
EMI	₹42,958
Total Interest to be Paid in 30 Years	₹1,04,64,779
Total Amount to be Paid in 30 years	₹ 1,54,64,779

Prepayment Details

Mr. Ram decides to make a prepayment of ₹5,00,000 at the 15-year mark. Let’s analyze the impact of this prepayment.

Prepayment Amount	₹5,00,000
New Principal After Prepayment	₹41,69,068 – ₹5,00,000 = ₹36,69,068

Loan Status at Year 15

At the 15-year mark, Mr. Ram has already made 180 EMIs and has 180 EMIs remaining. Here’s the status of the loan at that point:

Category	Amount
Opening Balance (Year 15)	₹41,69,068
EMIs Paid	180 months (15 years)
EMIs Remaining	180 months
Interest Already Paid	₹1,04,64,779 – Remaining Interest ≈ ₹36,08,226

Impact of Prepayment

Below is the detailed impact of the prepayment on Mr. Ram’s home loan:

Category	Before Prepayment	After Prepayment	Savings
Remaining Principal	₹41,69,068	₹36,69,068	₹5,00,000
Remaining Tenure	15 years (180 months)	11.5 years (138 months)	3.5 years (42 months)
Monthly EMI	₹42,958	₹42,958	–
Total Future Payments	₹77,32,440	₹59,28,204	₹18,04,236
Interest Component	₹35,63,372	₹22,59,136	₹13,04,236

Financial Benefits:

• Reduction in Loan Tenure: The prepayment of ₹5,00,000 reduces Mr. Ram’s loan tenure by 3.5 years (from 15 years to 11.5 years).
• Interest Savings: Mr. Ram will save approximately ₹13,04,236 in interest payments.
• Total Cash Flow Savings: The total amount of money saved in future payments, including the reduction in principal and interest, is ₹18,04,236.

Suggested Read: Should You Invest Extra Cash or Prepay

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Documents Required for Axis Bank Home Loan Prepayment

1. Prepayment Request Form (duly filled and signed).
2. Identity & Address Proof : PAN card, Aadhaar, passport, etc.
3. Loan Account Details : Loan account number and original loan agreement.
4. Payment Instrument : Cheque/DD/online payment proof for prepayment amount.

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How to Make Axis Bank Home Loan Prepayment Online?

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How to Make Axis Bank Home Loan Prepayment via Mobile Application?

1. Sign in with your primary Axis Bank savings-account credentials.
2. Tap Quick Links on the home screen.
3. Select Loans › Make Payment.
4. Choose Part Payment, enter the desired amount, and confirm.

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How to Make Axis Bank Home Loan Prepayment Offline?

Step	Description
1. Visit a Axis Bank Branch	Locate and visit the nearest Axis Bank branch during working hours.
2. Prepare the Payment	– Cheque Payment: Issue a cheque in favor of “Axis Bank”. – Cash Payment: Ensure the exact amount as change may not be available.
3. Submit the Payment	Submit the cheque or cash along with a written application specifying your loan account number, amount being prepaid, and whether it’s a partial or full prepayment.
4. Pay Applicable Charges	– Partial prepayments and full prepayments have charges. Refer to the Schedule of Charges under the “Fair Practice Code” on the Axis Bank website.
5. Obtain Acknowledgment	Request an acknowledgment receipt for the payment.
Important Notes	– Prepayments are accepted between the 6th and 24th of each month. – It may take up to 7 working days for the prepayment to reflect in your loan account.

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Why Does Axis Bank Charge You on Making Home Loan Prepayment?

Axis Bank, like other Banks, charges prepayment fees on home loans primarily for the following reasons:

Reason	Explanation	Key Points
Compensation for Lost Interest	Lenders lose future interest income when loans are prepaid.	– Fee offsets financial loss from foregone interest. – Ensures recovery of anticipated revenue.
Administrative Costs	Prepayment involves documentation, verification, and record updates.	– Covers operational expenses. – Secondary reason compared to lost interest.
Regulatory Framework	HFCs (like PNB Housing) are regulated by NHB, not RBI.	– NHB permits prepayment fees forboth fixed and floating-rate loans. – RBI bans fees for banks’ floating-rate loans. – Borrowers must verify updated regulations.
Market Practices & Profit	Prepayment fees act as a revenue stream in competitive markets.	– HFCs may prioritize profitability. – Borrowers can negotiate terms or switch lenders.

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When are Banks Not Allowed to Charge Prepayment Fees?

• Floating-Rate Home Loans (Individuals): RBI prohibits prepayment charges on floating-rate loans for individuals, allowing flexibility for partial and full prepayments.
• Government Scheme Loans: Loans under schemes like PMAY cannot have prepayment charges to promote affordable housing.
• Refinancing/Balance Transfer: Banks can’t charge prepayment fees when a loan is refinanced or transferred to another lender, except for standard processing fees.

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Things to Consider While Making Axis Bank Home Loan Prepayment

• Loan Type: Check if you have a fixed or floating rate loan to determine if prepayment charges apply.
• Prepayment Charges: Fixed-rate loans may attract a 2% charge on the outstanding principal for loan transfer.
• Partial vs. Full Prepayment: Partial prepayment reduces EMI or tenure, full prepayment eliminates the loan entirely.
• Loan Tenure Impact: Prepayment can shorten your tenure or reduce your EMI.
• Prepayment vs. Investing: Consider if investing the prepayment amount gives higher returns than saving on interest.
• Tax Implications: Prepayment may reduce home loan interest deductions under Sections 80C and 24(b).
• CIBIL Score Impact: Prepayment might temporarily affect your credit score.
• Emergency Fund: Ensure sufficient funds remain after prepayment for unforeseen expenses.
• Loan Agreement Terms: Review your agreement for any specific prepayment penalties or conditions.
• Long-Term Financial Goals: Align prepayment with your broader financial strategy and goals.
• EMI and Interest Reduction: Prepayment reduces both your EMI and total interest payable.
• Loan Balance: Ensure the prepayment amount is sufficient to meet your financial objectives.

Suggested Read: Can Home Loan Balance Transfer Backfire?

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When is it the Right Time to Make Home Loan Prepayment?

• When interest rates on your loan exceed potential returns from investments (e.g., stock markets, FDs).
• After building an emergency fund (3–6 months of expenses) and clearing high-interest debts.
• When prepayment penalties are low or waived (e.g., RBI prohibits banks from charging fees on floating-rate home loans for individuals).
• To shorten loan tenure significantly (prioritize prepayment if reducing tenure aligns with financial goals like retirement).
• If tax benefits (e.g., Section 24 deductions) are no longer a priority (prepayment reduces interest, lowering tax savings).

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Home Loan Part Pre Payment vs. Full Pre Payment

Here’s a concise comparison of Home Loan Part Prepayment vs. Home Loan Full Prepayment in a tabular format:

Criteria	Part Prepayment	Full Prepayment
Definition	Paying a portion of the outstanding loan amount before tenure ends.	Paying the entireremaining loan balance to close the loan immediately.
Impact on Loan	Reduces tenure(if EMI unchanged) or lowers EMI(if tenure unchanged).	Loan is closed permanently; no further EMIs or interest.
Key Benefit	Saves interest over the loan term; retains liquidity for other needs.	Eliminates debt entirely; improves cash flow post-closure.
Processing Fees	Lower or nil fees (varies by lender). May have annual prepayment limits.	Higher fees (e.g., 1–3% of outstanding amount). Some lenders waive fees.
Tax Implications	Tax benefits on interest (if applicable) continue for the reduced tenure.	Tax benefits (e.g., Section 24/80C in India) cease post-closure.
Eligibility	Allowed multiple times (subject to lender terms). No lock-in period in most cases.	One-time closure. Requires sufficient funds to settle the entire balance.
Example	Loan: ₹50L @ 8% for 20 years. Part-prepay ₹10L → Tenure reduces to ~15 years.	Loan: ₹50L outstanding. Full prepayment closes the loan, saving ₹XXL in future intere

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Advantages and Disadvantages of Home Loan Prepayment

Aspect	Advantages	Disadvantages
Interest Savings	Reduces overall interest paid over the loan tenure.	May not be ideal if the prepayment does not significantly reduce interest.
Loan Tenure	Shortens the loan tenure, allowing you to repay the loan faster.	Could lead to a higher monthly EMI if the loan tenure is reduced.
Financial Freedom	Provides peace of mind and reduces debt burden.	Might strain finances if the prepayment amount is large.
Credit Score Improvement	Can boost credit score by reducing outstanding debt.	Prepayment might temporarily lower liquidity.
Flexibility in Loan Terms	Offers the option to re-adjust loan tenure or EMI based on new principal.	Could incur prepayment penalties, especially in fixed-rate loans.
Opportunity for Investment	Frees up funds for other investments once the loan is repaid earlier.	Potential opportunity loss if funds used for prepayment could have been invested elsewhere for better returns.

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Is it Better to Prepay your Home Loan or Invest in a Mutual Fund?

Factors	Home Loan Prepayment	SIP Investment
Interest Rate vs. Returns	Compare your home loan interest rate (post-tax) with SIP returns. – If loan rate > SIP returns (e.g., loan at 12% vs. SIP at 8%), prepay. – If SIP returns > loan rate (e.g., loan at 8% vs. SIP at 10–12% long-term), invest.	Historically, equity SIPs average 10–12% returns over 5+ years. Returns are market-dependent and not guaranteed.
Tax Implications	Loss of tax deductions on home loan interest (if applicable).	Tax-efficient if investing in equity (LTCG taxed at 10% post-₹1 lakh exemption). ELSS SIPs offer tax deductions under Section 80C.
Risk Tolerance	No risk: Guaranteed savings via reduced interest.	Market risk: Volatile in short-term but potential for higher long-term gains.
Financial Goals	Prioritize becoming debt-free (short-term goals).	Build wealth for long-term goals (retirement, education).
Job Security/Income	Safer if income is unstable.	Requires stable income to withstand market volatility.
Age/Life Stage	Better for those nearing retirement (debt reduction).	Ideal for younger investors (long compounding horizon).
Emotional Factor	Peace of mind from reduced debt burden.	Motivation from growing wealth and financial freedom.
Loan Tenure Impact	Prepay early to save more interest. Partial payments reduce tenure.	No direct impact on loan; focus on wealth creation.
Emergency Fund	Ensure 6–12 months of expenses saved before prepaying.	Ensure emergency funds exist before investing.
Future Credit Needs	– Invest in SIPs if the loan rate is 8–10% (equity outperforms long-term). – Compounding in SIPs can yield a higher corpus over 20+ years.	Closing a loan may affect the credit mix/score.
Expert Opinion	– Prepay if the loan rate is high (e.g., 12–15%). – Avoid prepayment if leveraging low-interest loans for real estate gains.	– Invest in SIPs if the loan rate is 8–10% (equity outperforms long-term). – Compounding in SIPs can yield higher corpus over 20+ years.

Key Takeaways

Prepay If :

• Loan interest rate > SIP returns (post-tax).
• You prioritize stability and debt freedom.
• Uncertain income or nearing retirement.

Invest in SIP If :

• SIP returns > loan rate (e.g., equity SIPs over 8–10% loan rates).
• Comfortable with market risk and focused on long-term wealth.
• Younger with stable income and a 5–10+ year horizon.

Example :

• A ₹50 lakh loan at 9% (20 years) costs ₹76 lakh total. Prepaying ₹5 lakh early saves ₹12+ lakh in interest.
• Investing ₹25,000/month via SIP averaging 12% returns yields ₹3.5 crore in 20 years.

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Conclusion

Before considering prepayment, eliminate high-interest debts and secure an emergency fund. Prepaying your home loan can be beneficial if you aim to own your home sooner or decrease interest expenses.

If you’re considering a home loan balance transfer, trust Credit Dharma to find the perfect solution for you.

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Frequently Asked Questions