Check Savings with SBI Home Loan Prepayment Calculator

Estimated reading time: 6 minutes

Find out your net savings on your home loan with our SBI prepayment calculator:

Most homeowners find themselves saddled with considerable debt for years. Therefore, many yearn to repay their housing loan quickly. SBI offers a prepayment facility that enables borrowers to repay their home loan ahead of schedule. This blog elaborates on how SBI prepayment calculator can help reduce overall interest costs.

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Home Loan Prepayment

A home loan usually has a long tenure spanning 15-30 years. Prepayment allows borrowers to pay back some part of the loan amount before the tenure ends.

As a result, the subsequent EMIs and outstanding loan amounts decline. In turn, the total interest paid over the loan tenure also reduces significantly. SBI Bank offers both partial and full prepayment options. Customers can use the SBI Bank prepayment calculator to estimate potential savings from prepaying their home loans.

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SBI Home Loan Prepayment Calculator

Navigating the complexities of home loan management can be a daunting task. This is where Credit Dharma‘s Home Loan Prepayment Calculator becomes an indispensable tool. It helps homeowners understand how prepayment can impact their loan’s tenure and the total interest payable.

This calculator, ensured you have all the information needed to make informed decisions.

Key features

Key Features	Description
User-friendly interface	The calculator has a simple layout allowing fast calculations.
Personalized inputs	Borrowers can input their exact home loan details to get customized savings estimate.
Flexible options	Users can modify loan amount, tenure, interest rate as required to match their loan terms.
Detailed output	The calculator shows detailed breakup of regular EMIs, number of EMIs paid, pending EMIs, interest saved based on prepayment amount entered.

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How Credit Dharma’s Home Loan Prepayment Calculator Works

Let’s illustrate the use of this calculator with an example. A borrower had taken a home loan of Rs.1 Crore for a 20-year tenure at a 9% interest rate p.a.

The user has already paid 12 EMIs and now wants to prepay a lump sum amount of Rs.2 Lakh. The calculator will show the reduced EMI or the new shortened tenure. In this case, the calculator will show a total interest saved on the loan of Rs.8,47,731, and the EMI tenure is reduced by 12 months.

Loan Details	Value
Loan Amount	Rs.1 Crore
Tenure	20 years
Interest Rate	9% p.a.
Instalments Passed	12
Prepayment Amount	Rs.2 Lakh

Calculation Result	Value
Total Interest Saved On Loan	Rs.8,47,731
EMI Tenure is Reduced By	12 months

Factors to Consider Before Prepaying a Home Loan

While prepaying home loans seems lucrative, borrowers must evaluate certain aspects beforehand:

Benefits of Prepaying Your Housing Loans

Prepaying home loans using surplus funds carries multiple benefits:

1. Lower interest outflow: Prepaying loans cuts down interest costs as outstanding principal declines faster.
2. Shorter tenure: With every prepayment, loan tenure reduces, enabling faster debt freedom.
3. Lower EMIs: Alternatively, borrowers can also opt to reduce EMIs while keeping tenure constant.
4. Savings on total costs: Overall savings on a home loan can amount to several lakhs of rupees depending on the loan amount and tenure.

Understanding Prepayment Charges on SBI Home Loans

According to RBI guidelines, certain conditions allow banks and Housing Finance Companies (HFCs) to impose a prepayment penalty on home loans:

1. Non-Individual Borrowers:
   If the borrower is not an individual (e.g., a company or partnership), banks and HFCs can charge a prepayment fee.
   
2. Fixed-Rate Loans:
   Prepayment penalties are permissible on fixed-rate loans regardless of the borrower’s status, whether individual or non-individual.
   
3. Switching Lenders:
   If a borrower, holding a fixed-rate loan, opts to take another loan from a different bank or HFC to facilitate the prepayment, the original HFC is allowed to charge a prepayment penalty.

These conditions highlight the specific circumstances under which prepayment charges are applicable, helping borrowers plan their finances accordingly.

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Is overdraft a better option than prepayment for you?

What is overdraft?

An overdraft facility means that surplus funds can be deposited in a home loan account, thereby reducing the outstanding principal and, consequently, the interest charged. The facility of an overdraft account is good because at any point, the person can withdraw that surplus money and use it in circumstances where funds are required. So, the interest that one saves from the repayment of EMI benefits those who seek liquidity coupled with the ability to save on the cost of interest. But an overdraft facility may attract higher interest rates and some additional fees compared to standard loan terms.

Prepayment vs overdraft! What should you opt?

Prepayment results in considerable interest savings, but it does not allow fund withdrawal after the surplus is applied to the loan. Also, in the case of fixed-rate loans, some lenders may impose penalties for early prepayment.

So, the actual choice between the two—overdraft or prepayment—depends on the situation regarding the need for financial flexibility and liquidity in contrast to the interest in a fast manner of debt alleviation and saving.

Conclusion

Prepaying home loans substantially reduces interest outgo over long tenures. SBI offers a stellar prepayment calculator that borrowers can easily utilize to determine possible savings on their housing loans. After considering key aspects, homeowners can decide suitable prepayment amounts and strategy to optimize savings.

Use SBI’s prepayment calculator today to accelerate your journey to debt-freedom! Feel free to reach out to our team of experts for any queries.

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Frequently Asked Questions