Question 1

Is loan prepayment better than reducing EMI?

Accepted Answer

Keeping EMI unchanged and reducing tenure usually saves more interest because principal closes faster.

Question 2

When does prepayment save the most interest?

Accepted Answer

Prepayments made in the early years save the most interest because the outstanding principal is higher.

Question 3

Does this include prepayment penalty?

Accepted Answer

No. Add any lender penalty separately when comparing net benefit. Floating-rate home loans for individuals often have no prepayment penalty.

Question 4

Can I compare monthly and yearly prepayments?

Accepted Answer

Yes. Switch the prepayment type and use the same amount to compare how timing affects interest savings.