Financial Calculations & Valuation
Beginner
Home Loan Part-Prepayment Interest Saved & Tenure Reduction Simulator in Python
Simulate the exact interest saved and months shaved off a floating-rate Home Loan when making annual or lump-sum part-prepayments in Python Pandas.
#pandas#numpy
Problem Statement
Borrowers rarely realize that paying just one extra EMI per year or a 5% annual lump-sum prepayment in the early years of a 20-year Home Loan can cut total interest outflow by 35% and close the loan 6 years early.
Formula / Core Logic
Keeps monthly EMI constant, deducts annual_prepayment from principal every 12th month, and compares total interest and months against baseline.
Installation
pip install pandas numpy
floating-rate-home-loan-prepayment-tenure-reduction-simulator-python.py
def simulate_loan_prepayment_savings(principal, annual_rate, tenure_months, annual_lumpsum_prepay=100000):
r = (annual_rate / 100.0) / 12.0
emi = principal * r * ((1 + r) ** tenure_months) / (((1 + r) ** tenure_months) - 1)
base_total_interest = (emi * tenure_months) - principal
bal = float(principal)
months_taken = 0
new_interest_paid = 0.0
while bal > 0.01 and months_taken < 600:
months_taken += 1
interest = bal * r
new_interest_paid += interest
prin_paid = min(bal, emi - interest)
bal -= prin_paid
if months_taken % 12 == 0 and bal > 0:
bal = max(0.0, bal - annual_lumpsum_prepay)
return {
'Original_Tenure_Months': tenure_months,
'New_Tenure_Months': months_taken,
'Months_Saved': tenure_months - months_taken,
'Original_Total_Interest': round(base_total_interest, 0),
'New_Total_Interest': round(new_interest_paid, 0),
'Net_Interest_Saved': round(base_total_interest - new_interest_paid, 0)
}
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Buy Full Bundle on Gumroad ($19) →Frequently Asked Questions
Q: Can banks charge foreclosure or prepayment penalties on floating-rate Home Loans?
No! As per RBI directives, banks and HFCs are strictly prohibited from levying foreclosure or part-prepayment charges on floating-rate loans sanctioned to individual borrowers.