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Save big by cutting down your loan term! LIC Housing Finance’s Home Loan Prepayment Calculator helps you take control and make smart, money-saving decisions.
Planning to prepay your LIC Home Loan?
Let us help you through the process.
How to Prepay Your LIC Home Loan?
Learn how to prepay your LIC Home Loan here:
- Check Your Finances:
Ensure you have enough savings for other expenses and emergencies before deciding to prepay.
- Log into the Customer Portal
Visit the LIC HFL customer portal and log in with your credentials. If you don’t have an account yet, you can register using your loan account number and other details
- Select Prepayment Option
Once logged in, navigate to the loan section and choose whether to make a partial or full prepayment
- Make the payment
After selecting the loan account and amount, proceed to the payment gateway to complete the prepayment through net banking, UPI, or other available methods
- Verify Loan Details
After the payment, you can check your updated loan balance and new EMI schedule online through the portal
Why Consider Prepaying Your LIC HFL Home Loan?
Prepaying a portion of your home loan can have powerful benefits. Home loan prepayment involves paying an additional amount toward your loan principal before it’s due. This reduces your outstanding balance, helping you cut down on total interest costs and possibly even shorten your loan tenure. Here’s how prepayment can benefit you:
- Lower Interest Costs: With a smaller outstanding principal, your interest costs drop over time.
- Reduced Loan Tenure: Prepayments help you clear your loan faster, giving you financial freedom sooner.
- More Savings in the Long Run: Each rupee you prepay goes toward reducing your debt and improving your financial stability.
What is Prepayment?
Home loan prepayment refers to the process of paying an additional amount towards your loan principal before it’s due. This action can significantly reduce the outstanding principal, leading to lower interest payments over the loan tenure.
Prepayment can be a strategic move to become debt-free sooner and save money that would otherwise go towards interest payments.
How the LIC HFL Home Loan Prepayment Calculator Works
The LIC HFL Home Loan Prepayment Calculator is a powerful tool designed to help you make informed prepayment decisions. By entering your loan details, including your outstanding balance, current interest rate, and desired prepayment amount, you can instantly see the impact of prepayment on your loan tenure and total interest cost.
Key Features and Benefits
- Instant Calculation: Get quick results on how much you could save by prepaying.
- Compare Scenarios: See the difference between partial and full prepayments on your loan.
- Detailed Amortization Schedule: Track your EMIs and outstanding principal at each stage of your loan.
How Credit Dharma’s LIC Home Loan Prepayment Calculator Works
Here’s a simplified explanation of how the LIC HFL home loan prepayment calculator from Credit Dharma operates, using a practical example:
Let’s assume a borrower has a home loan from LIC HFL with the following details:
Initial Loan Details
| Category | Amount |
|---|---|
| Principal | Rs. 1 Crore |
| Rate of Interest | 9.00% p.a. |
| Tenure | 20 years |
| No. of EMIs Paid | 12 |
| Prepayment Amount | Rs. 2,00,000 |
With this information, the LIC HFL Prepayment Calculator shows the following impact:
Before Prepayment:
- Total Interest Payable: ₹1,15,93,423
- Remaining Loan Tenure: 228 months (19 years)
After Prepayment of ₹2,00,000:
- New Total Interest Payable: ₹1,07,45,692
- New Loan Tenure: 216 months (18 years)
Total Savings with Prepayment:
| Aspect | Amount |
|---|---|
| Interest Saved | ₹8,47,731 |
| Tenure Reduction | 12 months (1 year) |
With just one prepayment of ₹2,00,000, the borrower saves ₹8,47,731 in interest and reduces their loan tenure by a full year.
| Aspect | Before Prepayment | After Prepayment | Difference |
|---|---|---|---|
| Outstanding Principal | ₹97,96,352 | ₹95,96,352 | -₹2,00,000 |
| Total Interest Payable | ₹1,15,93,423 | ₹1,07,45,692 | -₹8,47,731 |
| Remaining Loan Tenure | 228 months (19 years) | 216 months (18 years) | -12 months (1 year) |
| Remaining EMIs | 228 | 216 | -12 EMIs |
Methods of Prepaying Your Home Loan
| Method | Payment Frequency | Extra Payment Per Year | Impact on the Loan |
|---|---|---|---|
| Bi Weekly | Every 2 weeks | Equivalent to 1 extra EMI | Gradual principal reduction Moderate interest savings Reduced tenure |
| Extra Annual Payment | Once a year | Varies based on amount | Significant principal reduction Substantial interest savings Reduced tenure |
| Lump-Sum Payments | One-time or occasional | Large one-time payment | Immediate principal reduction Maximum interest savings Potential to reduce EMI or tenure |
Factors to Consider Before Prepaying a LIC HFL Home Loan
While prepaying home loans seems lucrative, borrowers must evaluate certain aspects beforehand:
Considerations Before Prepaying Your Home Loan
- Check if your lender charges fees for early repayment, especially for fixed-rate loans.
- Ensure you have sufficient savings (3-6 months of expenses) before using surplus funds to prepay.
- Compare your loan interest rate with potential returns from investments; investing may yield higher returns.
- Prepayment reduces interest paid, possibly lowering tax deductions.
- Prioritize paying off higher-interest debts like credit cards or personal loans first.
- Consider upcoming expenses (education, medical, etc.) that require accessible funds.
- Don’t compromise long-term savings plans.
- Decide whether to reduce your loan tenure or lower your monthly EMI for better cash flow.
- Assess potential gains from alternative uses of the funds, such as investments or business opportunities.
- Factor in how inflation may decrease the real value of your loan over time.
- Explore if refinancing at a lower interest rate is more beneficial than prepayment.
LIC HFL Foreclosure Charges
Foreclosure charges, also known as prepayment penalties, are fees that lenders may charge when a borrower decides to pay off their home loan before the end of its tenure. These charges compensate the lender for the loss of expected interest income due to early repayment.
Typical Foreclosure Charges
Foreclosure charges can vary but generally fall within certain ranges:
- Charge Rate: 1% to 3% of the outstanding principal amount or the amount being prepaid.
- Sliding Scale: Some lenders apply a sliding scale where the penalty rate decreases as the loan matures.
Is Overdraft a Better Option than Prepayment for You?
An overdraft facility on a home loan account allows depositing surplus funds, which reduces the outstanding principal and the interest charged. This facility is beneficial because it provides liquidity—surplus funds can be withdrawn at any time.
While it helps save on interest costs, it’s important to note that overdraft facilities might come with higher interest rates and additional fees compared to standard loans.
Prepayment vs Overdraft: What Should You Opt For?
| Option | Features | Benefits | Good For |
|---|---|---|---|
| Prepayment | Directly reduces principal Saves on interest Potentially shortens loan tenure | Long-term interest savings Accelerates debt freedom | Borrowers seeking long-term savings and early debt clearance |
| Overdraft | Allows deposit and withdrawal of surplus funds Interest calculated on reduced principal | Flexibility in fund access Saves interest while funds are deposited | Borrowers needing liquidity and flexibility with continued savings |
Considerations
- Financial Stability: Overdraft might be more suitable if you expect fluctuating income or expenses.
- Interest Rates: Compare the potential interest savings against the higher costs associated with an overdraft facility.
- Financial Goals: Prepayment might be better if your goal is to reduce debt quickly.
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Conclusion
Prepaying home loans substantially reduces interest costs over long tenures. LIC HFL offers exceptional prepayment options for borrowers to determine potential savings on their housing loans.
Looking for expert guidance on your home loan journey? Choose Credit Dharma for all your home loan needs, from application to repayment. We’re here to assist you in making informed decisions, optimizing prepayment amounts, and strategizing for maximum savings.
Frequently Asked Questions
LIC Housing Finance generally allows any amount of prepayment without charges on floating rate home loans. For fixed rate loans, conditions may apply, so it’s best to refer to your loan agreement or contact LIC directly.
The reduction in EMI after a prepayment depends on whether you choose to lower the EMI or shorten the loan tenure. If you opt to decrease the EMI, the amount of reduction will depend on the remaining tenure and the prepayment amount.
Most lenders allow significant prepayments for floating rate home loans without any charges. However, fixed rate loans might have restrictions or penalties. The exact terms can vary, so checking your specific loan agreement is advisable.
To close a home loan early with LIC, you can make a full prepayment of the outstanding balance. It’s recommended to notify LIC in advance, prepare the necessary funds, and follow up with them to complete any required formalities to ensure the loan is closed properly.
Deciding between prepayment or continuing with a home loan depends on your financial situation. Prepayment can save on interest costs but may deplete your cash reserves. Consider your financial goals and consult with a financial advisor to make an informed decision.
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