Reviewed by: David Chen, CFA
David Chen is a Certified Financial Analyst with extensive experience in home loan management.
David Chen is a Certified Financial Analyst with extensive experience in home loan management.
Use this tool to calculate the impact of making part-prepayments on your home loan.
Home Loan Part-Prepayment Calculator
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Home Loan Part-Prepayment Formula
New Term = (Loan Amount – Prepayment) × Interest Rate / Loan Term
Formula Source: Investopedia
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What is Home Loan Part-Prepayment?
Making part-prepayments on your home loan can reduce the total interest paid over the loan term and shorten the duration of the loan. This is especially helpful for borrowers who receive a lump sum amount and wish to reduce their debt burden.
How to Calculate Home Loan Part-Prepayment (Example)
- Step 1: Enter your loan amount, interest rate, loan term, and prepayment amount.
- Step 2: Click “Calculate” to find out the new loan term after making the prepayment.
Frequently Asked Questions (FAQ)
What is part-prepayment? Part-prepayment refers to paying off a portion of your loan early to reduce the outstanding balance and interest payments.
How does part-prepayment affect my loan term? By making part-prepayments, your loan term can shorten, and you will pay less interest over time.