Make room for what matters
Prepay or Invest Planner
Spare money can go into the loan or into the market, and the two are not comparable on rate alone: prepaying returns a known figure with certainty, investing returns an unknown one with risk. This planner works out both outcomes from your actual balance and rate, and leaves the choice where it belongs.
Enter your details below. Your estimate updates as you explore, and you can check the calculation behind it.
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Start with the defaults, then adjust your details.
View your estimateHow this planner works
Anyone with a running loan and money spare, deciding where it should go. It is equally useful for someone about to receive a bonus and someone who could redirect a few thousand a month, because the shape of the answer changes with which of those it is.
Method
Two engines, one horizon, no verdict
Prepaying is costed by the amortisation engine and investing by the investment engine, both over the same period, so the figures differ only in what they describe rather than in how they were produced. The page then stops. What is missing from the arithmetic — your tax position, how secure your income is, whether you would actually invest the money or spend it, and how you would feel about a market fall while still carrying the loan — is not a rounding error, it is most of the decision.
The prepaying side replays your loan month by month with the extra payments applied, using the same reducing-balance engine the EMI calculator runs. The interest saved is the difference between the interest on the original schedule and the interest on the shortened one — a figure you can be certain of, because it is money the lender will simply never charge.
Prepayment here shortens the tenure rather than reducing the instalment. Lenders normally offer both, and reducing the instalment saves far less interest, so the comparison uses the option that gives prepaying its strongest case.
The investing side projects the same money at the return you assume, over the horizon you set, using the same investment engine as the SIP calculator. It is a projection: the rate is held constant, real markets are not, and any individual year can be negative.
Closing the loan early frees the instalment. That freed cash is projected for the remainder of the horizon and shown separately, because leaving it out understates prepaying — it is the most commonly forgotten term in this comparison.
Both sides are reported and neither is marked as the answer. A known return of eight and a half percent and an assumed return of ten percent are not comparable quantities, and no arithmetic here can weigh the certainty of one against the risk of the other.
What this does not tell you
- It ignores tax entirely. Interest deduction on a home loan under section 24, and capital gains on the invested side, both change the comparison and neither is modelled. On a home loan this can be a large omission.
- It assumes a constant investment return. Sequence matters in reality: the same average return delivered in a different order produces a different outcome, and a fall early on while you are still carrying the loan is the scenario that hurts most.
- It assumes the loan rate holds. On a floating-rate loan it will not, and a rate rise makes prepaying look better in hindsight than the figures here suggest.
- It assumes you actually invest the money. Money not paid into a loan is not automatically invested, and the comparison quietly depends on it being.
- It does not model prepayment charges, which some lenders levy on fixed-rate loans, or any minimum part-payment the lender requires.
- It says nothing about liquidity. Money put into a loan is gone; money invested can be reached. For a household with no emergency fund that difference matters more than either figure on this page.
Frequently asked questions
Calculators behind this plan
This planner is built from the same calculations these calculators run. Open one to look at a single piece of the plan in more detail.
Loan Prepayment Calculator
Compare repaying on schedule against paying extra, and see the interest and time it saves.
Open calculatorEMI Calculator
Work out the monthly instalment, total interest and repayment schedule for any reducing-balance loan.
Open calculatorHome Loan EMI Calculator
Work out the instalment, total interest and amortisation on a housing loan.
Open calculatorSIP Calculator
Project what a fixed monthly mutual fund SIP could grow to at an assumed rate of return.
Open calculatorLoan Balance Calculator
Find out how much of a loan is still outstanding part-way through its term, and how much of it you have actually repaid.
Open calculatorOther planners
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Size an emergency fund against your essential monthly spending, see how many months you are already covered for, and what closing the gap would take each month.
Open plannerHome Purchase Planner
See what a property might cost by the time you buy, what the deposit would take to save, and what the loan on the remainder would cost each month.
Open plannerEducation Planner
Estimate what a course will cost by the time it starts, what your current saving reaches by then, and the monthly contribution the fee would need.
Open plannerRetirement Planner
Work out the corpus your retirement needs, what your current saving is projected to reach, and the monthly contribution that would close the gap.
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Disclaimer
These planners are provided for general information and planning only, and are not investment, tax or legal advice. Every figure is an estimate produced from the assumptions you enter, each of which is listed on the page — they are not forecasts of markets, inflation, property prices or fees, none of which can be predicted. Market-linked investments can lose value and past returns say nothing about future ones. Nothing here recommends a product or a course of action. For advice on your own situation, speak to a qualified professional, several of whom you can consult on Finvestalk.