Reduce EMI or number of years during loan pre payment

POSTED BY rahulp ON June 18, 2014 5:29 pm COMMENTS (5)


I have taken home loan of Rs 30 Lakhs from SBI for 20 years. This is a loan account but NOT Max gain account. I request reply to the following:

1] Suppose, I have an amount of Rs 2 lakhs which I am ready to pay upfront to SBI corresponding to my loan, then is it advisable to:

[A] get the duration of my home loan reduced OR

[B] get reduction in the EMI to be paid per month ?

2] Is this type of transaction to be done at the bank branch or SBI RACPC ? Is it done within a day or frequent visits are needed ?

3] Is there any limitation on the number of times such transaction can be done with the bank during loan duration ?

4] Is there any minimum amount, which the bank needs during pre payment ? Example: The bank accepts minimum Rs. 1 Lakh as pre payment or any such condition.

5] Is there any formula through which I can find that if I am pre paying some amount then, the loan duration will be reduced by how many years ?



5 replies on this article “Reduce EMI or number of years during loan pre payment”

  1. Ajay says:

    My responses

    1. Sharath suggested above. If you reduce the tenure the interest outgo will also reduce.
    2. I remember I used to do it via internet banking. Just transfer from SB to loan account through internet banking.
    3. Not sure. You may want to read the document once.
    4. Not sure. You may want to read the document once. I used to pay more than my EMI once in a 2-3 months.
    5. If you have MS excel then click on new and look for templates called amortization. There are a few listed there. Let me know if you need a template and I can share via email.

    1. rahulp says:

      Ajay, thanks a lot for reply.
      If I transfer the required amount to my loan account through internet banking, how would SBI reduce the tenure of loan ? Am I supposed to email them informing about the transfer after which they would reduce the loan tenure and would then inform me through email or is there an another way to do so.
      The reason behind asking the exact process is to check that if this process requires a day or two by visiting the branch or RACPC then I would schedule it accordingly or if it can be done through internet then of course it’s time saving.

      Is it confirmed that State bank of India allows to decrease the loan tenure rather than reducing the monthly EMI if I pay some amount upfront ?

      Within points 3 and 4 of your reply which document are you referring to be read ?


      1. sharath Mumbai says:

        The loan terms and conditions document.

  2. sharath Mumbai says:

    Hi Rahul,
    If you have regular income and if you dont feel the EMI is burden, then I would suggest reducing tenure. By doing so, you would get a feeling that your loan would finish soon and would give some peace of mind.
    There are many excel sheets available (like emi calculators with repayment). you can use them to see the reduced tenure.

    1. rahulp says:

      Sharath, thanks a lot for reply.

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