Many people have this query, increase emi or prepayment which is better for home loan? When repaying a home loan, deciding between increasing your monthly EMI payments or making a lump-sum prepayment is a key strategic choice. The “better” option depends on your income stability, financial goals, and flexibility requirements.
Increase EMI
Increasing your EMI means committing to a higher monthly payment. The advantage is that you steadily repay the principal faster, significantly shortening the tenure and reducing total interest over time.
This path works best “if you have a stable income and can comfortably manage higher monthly payments.” On the other side, higher EMIs reduce liquidity and may strain finances if your income fluctuates.
Prepayment
Prepayment involves making a one-time or occasional lump-sum payment against your outstanding principal. This immediately lowers the interest burden, shortens loan duration, and offers flexibility. You can retain lower regular EMIs and free up cash at other times.
The prepayment is “ideal when you receive bonuses or your income is irregular.” However, the opportunity cost must be weighed. Locking in cash into prepayment means less left for investing elsewhere, and you might lose out on tax benefits tied to the loan interest.
If you expect your income to grow steadily and are comfortable with higher monthly outgo, increasing your EMI could be the smarter long-term strategy. If, instead, you prefer maintaining flexibility and paying off in bursts when you can, prepayment gives more control.
I hope you found this helpful.
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Increase EMI or Prepayment Which is Better for Home Loan?
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2025-10-30T17:41:35+00:00 2025-10-30T17:41:37+00:00Comment
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