Loan Amortisation Schedule

An amortisation schedule shows where each EMI actually goes. The EMI is constant, but the split is not: in the first years most of it is interest, and only late in the loan does principal dominate. Seeing the table is usually what convinces people to prepay.

The schedule below is generated for your loan. Read the Interest column against Principal in year 1 versus year 15 — on a 20-year loan at 8.5%, roughly 70% of your first year's EMIs is pure interest.

Reading the schedule

Each month the lender charges interest on the balance you still owe. Whatever is left of your EMI after that interest reduces the principal. Because the balance shrinks, next month's interest is slightly smaller and slightly more of the EMI goes to principal — the effect accelerates towards the end.

Month's interest = outstanding balance × (annual rate ÷ 12 ÷ 100)
Principal repaid = EMI − month's interest

What the table tells you

• The halfway point is not year 10. On a 20-year loan at 8.5% you only clear half the principal around year 13.
• Early prepayment is disproportionately powerful, because it removes balance during the years when interest is largest.
• Section 24(b) interest deduction is capped at ₹2 lakh a year for a self-occupied property. On a large loan your year-1 interest may far exceed the cap — the schedule shows when you drop below it.

Worked example

Take a ₹50 lakh loan at 8.5% over 20 years. The EMI is ₹43,391. In month one, interest is ₹50,00,000 × 0.085 ÷ 12 = ₹35,417 and only ₹7,974 reduces the balance. By year 10 the balance is around ₹33.6 lakh and roughly ₹18,600 of the same EMI is principal. The payment never changes; what it buys does.

Frequently asked questions