Loan Amortization Schedule

Loan Amortization Explained — How Your EMI Really Works

Every EMI you pay is split into two parts: interest on the outstanding loan balance, and principal repayment that reduces what you owe. In the early months of a long tenure loan, the vast majority of your EMI is interest. On a 20-year home loan at 9%, your first EMI is roughly 84% interest and only 16% principal. The amortization schedule above shows this split for every single month of your loan.

Why the Early Years Are So Interest-Heavy

Banks calculate your interest each month on the outstanding principal balance, not the original loan amount. In month 1, the outstanding balance is the full principal — so interest is at its maximum. As you pay down the loan, the balance falls, and so does the interest charge. The EMI stays constant (for fixed-rate loans), so the surplus over interest goes to principal — which grows every month.

This process is called reducing balance amortization, and it is the method used by all RBI-regulated lenders in India. The formula for the interest component of any EMI is simply:

The Principal–Interest Crossover Point

There is a specific month in every loan where the principal repayment component of your EMI first exceeds the interest component. This is the crossover point — shown as the "Principal > Interest" card above. On a 20-year home loan at 9%, this crossover happens around month 145 (year 13). Before that point, over half of every EMI is going to the bank as interest.

The crossover point has a critical implication for prepayment timing: every rupee you prepay before the crossover saves more than a rupee in total interest. A ₹1L prepayment in year 1 eliminates several years of future interest-heavy EMIs. The same prepayment in year 18 saves almost nothing — the loan is nearly paid off anyway. Use our prepayment calculator to model exactly how much any prepayment saves at any point in your loan.

How to Read the Amortization Schedule

Using the Yearly View for Tax Planning

Switch to Yearly view to see the total interest paid each calendar year. This is exactly the number you need for Section 24(b) — the income tax deduction on home loan interest (up to ₹2 lakh per year for self-occupied property). Your lender will issue a certificate with the same figures; the yearly schedule lets you estimate your tax benefit before the certificate arrives.

For education loans, the yearly interest figure feeds into the Section 80E deduction — where the full interest paid (no upper cap) is deductible for up to 8 years from repayment start.

3 Things You Can Do With This Schedule

1. Verify your sanction letter. Enter the exact rate and tenure from your lender's offer and confirm the EMI matches. Calculation errors in lender systems are rare but do happen — a mismatch of even ₹50/month compounds over 20 years.
2. Time your prepayments. Find your crossover point in the monthly schedule. Prepay before that month and every rupee saves more than a rupee in interest. Use the prepayment simulator to see the exact saving for any prepayment amount at any month.
3. Claim the right tax deduction. Switch to Yearly view and note the interest paid in each financial year (April–March). This is your Section 24(b) or 80E deduction input — no need to wait for the lender certificate to estimate your tax liability.

To calculate EMI for a specific loan type, visit our home loan EMI calculator, car loan EMI calculator, or personal loan EMI calculator. To compare two loan offers on total interest, use our loan comparison tool.