Home Loan Prepayment Strategies: How Much Interest You Save (2026)

Updated 18 October 2026. By Vijay Arjun V (B.Pharm, PGDM): authorised LIC HFL DSA since 2002 and DME (Direct Marketing Executive) appointed by LIC HFL. LIC HFL terms checked on lichousing.com on 18 October 2026. Loan figures are our calculation.

Rate just gone up? After the RBI’s repo hike of 7 October 2026, see whether to increase your EMI or your tenure, with the full math and an infographic you can share.

How much do you save by prepaying your home loan?

Example: ₹50 lakh, 20 years, 7.40% (LIC HFL’s lowest published rate, for salaried borrowers with CIBIL 825+, checked 18 October 2026). EMI ₹39,974; total interest without prepayment ₹45.9 lakh.

Prepayments are assumed at the end of each loan year; the ₹5 lakh is paid after the 24th EMI. Try your own numbers in the home loan prepayment calculator: it shows interest saved, EMIs saved and a revised schedule you can download.

Should you reduce EMI or tenure after a prepayment?

Reduce the tenure if you can afford the current EMI: in the example, the same ₹5 lakh saves ₹11.0 lakh that way, against ₹3.9 lakh by lowering the EMI. Lower the EMI only if you need room in your monthly budget, for example after a job change or a second loan. The same logic applies when rates rise: a higher EMI costs less than a longer tenure. See increase your EMI or tenure after a rate hike.

Are there prepayment charges on an LIC HFL home loan?

No, on floating-rate home loans to individuals, unless the loan is for business purposes. RBI rules bar banks and housing finance companies from charging for prepaying such loans (RBI Pre-payment Charges Directions, 2025). Fixed-rate schemes can have different terms, so check your sanction letter or ask us. For closing a loan in full, see LIC HFL home loan foreclosure.

When is prepaying the best use of your money?

• Early in the loan, when most of each EMI is interest.
• After you have an emergency fund of about six months’ expenses, EMIs included: prepaid money is hard to get back.
• When your other options earn less after tax than your loan rate.
• If you use the old tax regime, remember that the deduction on home loan interest lowers your effective rate a little. See home loan tax benefits for 2026.

How do you make a prepayment on an LIC HFL home loan?

Through LIC HFL’s customer portal on lichousing.com or the office that services your loan; LIC HFL’s customer support number is 1800 209 1989. Ask for the revised repayment schedule afterwards and check whether the EMI or the tenure was reduced. If you took your loan through us, we can help you put in the request.

Paying a high rate elsewhere? A lower rate may save more than prepaying: see home loan balance transfer to LIC HFL.

Frequently asked questions

Is it better to prepay a home loan or invest?

Prepaying gives a guaranteed “return” equal to your loan rate. If your investments are unlikely to beat that after tax and risk, prepaying usually wins, once your emergency fund is in place.

Is there a minimum amount for a part-payment?

Lenders can set a minimum for part-payments. Check with LIC HFL for your loan, or ask us.

Does prepayment reduce my tax benefit?

Under the old tax regime, yes: you pay less interest, so the interest deduction falls too. You still come out ahead, because you save the full interest, not just the tax on it.

How much is the EMI on a ₹50 lakh loan?

₹39,974 over 20 years at 7.40%. For other amounts and terms, see EMI for a ₹50 lakh home loan.

Sources: LIC HFL home loan terms on lichousing.com, checked 18 October 2026; RBI Pre-payment Charges on Loans Directions (2 July 2025). All savings figures are our calculation.

Hyderabad Home Loans is run by Elite Financial Services, an authorised Direct Selling Agent (DSA) of LIC Housing Finance Ltd. We are not LIC HFL. Loans are sanctioned solely at LIC HFL’s discretion; rates and fees may change.