Why the choice matters more than the prepayment itself
Making a lump-sum prepayment on a home loan is one of the highest-return financial moves available to a salaried Indian borrower. On a ₹50 lakh loan at 8.5% over 20 years, the total interest outgo is roughly ₹58 lakh, more than the principal itself. A single prepayment of ₹5 lakh in year three, directed correctly, can eliminate three to four years of that tail. Directed incorrectly, it delivers the same principal reduction but far less interest savings, because the benefit gets spread across a longer remaining period rather than compressing the loan's end.
