Loan Foreclosure Calculator
Calculate savings and charges for foreclosing your loan before maturity
RBI Rules on Loan Foreclosure
- Floating rate loans from Banks: NO foreclosure charges allowed (RBI circular dated Aug 18, 2014)
- Floating rate loans from NBFCs: NO foreclosure charges allowed (RBI circular dated Feb 14, 2024 — applicable from Aug 14, 2024)
- Fixed rate loans from Banks: Banks MAY charge foreclosure penalty — typically 2-4%
- Fixed rate loans from NBFCs: NBFCs MAY charge foreclosure penalty — typically 2-4%
- Personal loans: Even floating rate personal loans from NBFCs are now free from foreclosure charges
- Lock-in period: Some banks have a minimum lock-in period (6-12 months) before foreclosure is allowed
- Part-foreclosure: Many banks allow partial prepayment without charges, especially for home loans
- Impact on credit score: Foreclosure has a neutral to slightly positive effect on credit score
Foreclosure Charges by Loan Type
- Home Loan (Floating): Nil (RBI mandate)
- Home Loan (Fixed): 2-4% typically
- Car Loan (Floating): Nil (RBI mandate)
- Car Loan (Fixed): 2-4%
- Personal Loan: Nil for floating rate (post RBI 2024 rule); 2-5% for fixed rate
- Education Loan: Usually nil — most banks do not charge for education loan foreclosure
- Business Loan: Varies by lender; floating rate loans should have nil charges
About Loan Foreclosure Calculator
The Loan Foreclosure Calculator computes the total amount required to close your loan before the end of its tenure, including the outstanding principal, interest, and any prepayment penalties. Foreclosure (also called prepayment) can save significant interest costs — for a ₹50 lakh home loan at 9% for 20 years, closing after 10 years saves approximately ₹28 lakh in interest. The calculator shows the exact savings and charges for FY 2026-27.
RBI has mandated that banks cannot charge foreclosure penalties on floating-rate loans for individual borrowers. This means home loans (which are mostly floating-rate) can be prepaid partially or fully without penalty. However, fixed-rate personal loans and car loans may attract prepayment charges of 2-5%. Our calculator handles both scenarios and provides a clear picture of the net benefit of foreclosure, including the interest you save versus any penalties payable.
Key Features
- Foreclosure amount computation
- Interest savings calculation
- Prepayment penalty handling
- Partial vs full prepayment comparison
- RBI guideline compliance check
Frequently Asked Questions
Is there any penalty for home loan prepayment?
No, as per RBI guidelines, banks cannot charge prepayment penalties on floating-rate home loans for individual borrowers. This applies to both partial and full prepayment. However, fixed-rate home loans and loans from NBFCs may still carry prepayment charges. For personal loans and car loans with fixed rates, prepayment charges of 2-5% typically apply after the lock-in period.
Should I prepay my home loan or invest the money?
This depends on the comparison between your home loan interest rate and expected investment returns. If your home loan rate is 8.5% and you can invest at 12% post-tax (like equity SIP), investing is better. However, if your risk appetite is low and FD rates are 7%, prepaying the loan is wiser since the guaranteed saving (8.5%) exceeds the guaranteed return (7%). Consider your risk tolerance and financial goals.
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