Can I close my home loan early, and is there a charge?
By Vijay Singh Sinhmar · Fintech automation specialist, 8 years in finance · Published 2026-10-09
Yes. RBI does not allow lenders to charge a fee for closing early a floating-rate home loan taken by an individual for a non-business purpose; a fixed-rate loan may carry a charge set in the agreement. On a ₹50,00,000 loan at an example 8.5% over 20 years, you owe ₹34,99,678 after ten years, and closing it then saves ₹17,07,242 of interest.
Educational information, not investment advice · Muktify is not SEBI-registered
Home Loan Prepayment Calculator
A lump sum or a little extra each month — see the interest it saves, and whether to cut the EMI or the tenure.
Leave blank and it is worked out from the balance, rate and years left.
Paid on top of the EMI. It shortens the loan, so it counts in the first option only.
Interest saved by prepaying
₹7,56,579
EMI now
₹26,035
Interest left to pay
₹32.48L
Ends in
20 years
Ends in, after prepaying
17 years
Keep the EMI, shorten the loan
You go on paying the same EMI, so the loan ends sooner.
Interest saved
₹7,56,579
- Monthly payment
- ₹26,035
- Loan ends in
- 17 years
- Time saved
- 3 years
Keep the end date, lower the EMI
The loan runs for the same time, with a smaller EMI.
Interest saved
₹2,16,555
- New EMI
- ₹24,299
- EMI falls by
- ₹1,736
- Loan ends in
- 20 years
Estimates only. The prepayment is applied at the start, at a fixed rate. Your lender's figures may differ with the day it credits the payment and with any rate reset.
Educational estimates from your own inputs and assumptions — not investment advice. Muktify is not SEBI-registered.
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When there is a charge, and when there is not
RBI has barred banks and housing finance companies from levying foreclosure or prepayment charges on floating-rate term loans to individuals for purposes other than business. Most home loans in India are floating-rate, so for most borrowers closing early costs nothing beyond the balance itself.
A fixed-rate home loan is different: the agreement can set a charge for closing early, often a percentage of the amount repaid. The sanction letter and loan agreement say which kind of loan you have and what, if anything, applies.
How much interest closing early saves
Take ₹50,00,000 at an example 8.5% over 20 years, an EMI of ₹43,391. Interest is charged on the balance still owed, so the earlier the loan is closed, the more interest it never charges.
After 5 years you owe ₹44,06,343 and closing then avoids ₹34,04,037 of interest. After 10 years you owe ₹34,99,678 and closing avoids ₹17,07,242. After 15 years you owe ₹21,14,929 and closing avoids ₹4,88,531. The same loan, closed five years apart, saves very different amounts.
| Closed after | Amount to repay | Interest avoided |
|---|---|---|
| 5 years | ₹44,06,343 | ₹34,04,037 |
| 10 years | ₹34,99,678 | ₹17,07,242 |
| 15 years | ₹21,14,929 | ₹4,88,531 |
The steps, and what to collect
Ask the lender for a foreclosure statement, which gives the exact amount due on a given date including interest up to that day. Pay it from your own account, then collect a no-dues certificate and the original property documents the lender holds.
RBI requires lenders to return the original property documents within 30 days of the loan being fully repaid, and to pay ₹5,000 for each day of delay beyond that. Check too that the lender’s charge on the property is removed from the registry where one was recorded, and that the loan shows as closed on your credit report a month or two later.
Frequently asked questions
Is foreclosure the same as prepayment?
Foreclosure is repaying the whole loan at once. Prepayment, or part payment, is repaying some of it early while the loan continues with a lower balance. The rule on charges is the same for both on an individual’s floating-rate home loan.
Does closing a home loan early affect my credit score?
Closing a loan as agreed is recorded as a loan repaid in full. Your report then shows one fewer active loan; it does not count against you as a missed or settled payment would.
What if I cannot close the whole loan?
A part payment reduces the balance and the interest on it. Your lender then lowers the EMI or shortens the loan, and the two save different amounts.
How long does it take to get my property papers back?
RBI requires the lender to return the original documents within 30 days of full repayment, and to compensate you at ₹5,000 for each day of delay beyond that where the delay is the lender’s.
Related
- Home loan prepayment calculator →
- After a part payment, lower EMI or shorter tenure? →
- What is the EMI on a ₹50 lakh home loan? →
- Should I prepay my home loan or invest? →
Last updated 2026-10-09. Figures reflect FY 2026-27 and are educational estimates, not advice. Muktify is not SEBI-registered and never recommends or ranks any instrument.
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