Loan Foreclosure Calculator

Should you close your loan early? Compare penalty vs interest savings.

Currency

Current Loan Status

$
Foreclosure Charges

Floating rate home loans in India: 0% penalty (RBI rule)

Opportunity Cost
If invested at% annually
Verdict
Yes, Foreclose It!
You save $55,455 (27% of remaining payments)

Continue Loan

Monthly EMI$1,742
Remaining Interest$58,995
Total Outflow$208,995

Foreclose Now

Penalty (2%)$3,000
GST (18%)$540
Total Cost$153,540
Break-even Point: 1 months
If you have fewer than 1 months left, foreclosure won't save money due to penalty charges.
Opportunity Cost Analysis
$97,051
If invested at 5%
$58,995
Loan interest
+$38,056
Net difference
💡 Tip: If your investment returns exceed your loan rate, investing may be better than foreclosing. Factor in tax benefits on home loan interest too.

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Should You Close Your Loan Early?

Foreclosure means paying off your entire loan balance in one go. While you save on future interest, lenders often charge a penalty (typically 2-5%) to compensate for lost interest income.

The question is simple: Is the penalty less than the interest you'd pay? Our calculator gives you a clear Yes or No verdict, plus break-even analysis and opportunity cost comparison.

Key Considerations

Interest Saved

Long remaining tenure = more interest to save. Foreclosing a loan with 15+ years left saves significantly more than one with 2 years left.

Penalty Charges

Banks charge 2-5% penalty + GST. Important: Floating rate home loans in India have 0% penalty (RBI mandate). Check your loan type.

Break-Even Point

The minimum remaining tenure where foreclosure makes sense. Below this, penalty exceeds interest savings.

Opportunity Cost

Could your money earn more invested elsewhere? If investments return more than loan rate, investing may be smarter.

All Features

6 Currencies - USD, GBP, EUR, AUD, CAD, INR
Penalty Presets - 0%, 1%, 2%, 3%, 4%, 5%
GST on Penalty - Accurate total cost
Break-Even Analysis - Minimum tenure shown
Opportunity Cost - Compare with investing
Clear Verdict - Yes/No with savings %
Side-by-Side - Continue vs Foreclose
Download Report - Save detailed analysis

Frequently Asked Questions

What is loan foreclosure?

Loan foreclosure (or pre-closure) means paying off your entire outstanding loan balance in one lump sum before the scheduled end date. This eliminates future interest payments but may incur a penalty charge from the lender.

What is the typical foreclosure penalty?

Penalties typically range from 2-5% of the outstanding amount. However, in India, RBI has mandated zero penalty on floating rate home loans for individuals. Fixed rate loans and other loan types may still have penalties. Always check your loan agreement.

When is foreclosure beneficial?

Foreclosure saves money when: (1) Remaining tenure is long (more interest to save), (2) Penalty is low or zero, (3) You have surplus funds not needed for emergencies, (4) Your investment returns are lower than loan interest rate. Our calculator shows exact savings.

What is break-even point in foreclosure?

Break-even point is the remaining tenure below which foreclosure doesn't save money. If remaining interest is less than penalty charges, don't foreclose. Our calculator shows your specific break-even point in months.

Should I invest or foreclose?

Compare investment returns vs loan interest rate. If you can earn 8% investing but pay 7% on loan, investing may be better—but consider risk. Our calculator shows opportunity cost analysis. Foreclosure is guaranteed savings; investments have risk.

Is GST charged on foreclosure penalty?

Yes, in India, banks charge 18% GST on the foreclosure penalty amount. On a 2% penalty, effective cost becomes 2.36%. Our calculator includes GST calculation for accurate total cost.

Is there no penalty on home loans in India?

Correct! RBI mandates zero foreclosure penalty on floating rate home loans for individual borrowers. This applies to most home loans since they're floating rate. However, fixed rate loans and loans to non-individuals may have penalties.

What about tax benefits on home loans?

Foreclosing means losing future tax benefits on interest (Section 24 up to ₹2L) and principal (Section 80C up to ₹1.5L). Factor this in—if you're in 30% tax bracket, effective interest rate is lower. Our calculator doesn't include tax, so adjust manually.

Can I do partial prepayment instead?

Yes! Part-prepayment is often a better strategy—reduces principal and interest without full foreclosure. Many loans allow prepayment without penalty (especially floating rate home loans). See our Prepayment Calculator for part-payment analysis.

How do I request loan foreclosure?

Submit a written request to your lender requesting foreclosure quote. They'll provide exact outstanding, penalty amount, and GST. Pay the total amount, get NOC (No Objection Certificate), and ensure encumbrance is removed if property was pledged.