| Period | EMI Paid | Principal | Interest | Balance | Split |
|---|
What is EMI?
EMI (Equated Monthly Instalment) is the fixed amount you pay your lender every month until the loan is fully repaid. Each EMI has two components: interest on the outstanding balance and a portion that repays the principal. Early EMIs are mostly interest; later ones are mostly principal.
How is EMI calculated?
EMI = P × r × (1+r)ⁿ / ((1+r)ⁿ − 1), where P = principal, r = monthly rate (annual rate ÷ 12 ÷ 100), n = tenure in months. This is the standard reducing-balance formula used by all Indian banks including SBI, HDFC, ICICI, and Axis.
What is a good home loan interest rate in 2024?
Home loan rates in India currently range from 8.35% to 9.5% p.a. for most borrowers. SBI, HDFC, and Kotak typically offer the lowest rates. Your rate depends on your CIBIL score — a score above 750 gets you the best rates. RBI's repo rate directly affects floating rate loans.
What is amortisation?
Amortisation is the process of gradually paying off a loan through regular EMI payments. The schedule shows exactly how much of each payment goes toward interest vs principal. In early years, most of your EMI is interest. By the end, almost all of it is principal — this is called front-loading of interest.
Should I prepay my home loan?
Prepayment in the early years saves significantly more interest than prepayment later. Even prepaying 1–2 extra EMIs per year can shorten your loan by 3–4 years. Most banks allow up to 25% prepayment annually without penalty on floating-rate home loans as per RBI guidelines.
What is the 50/30/20 rule for loans?
A common guideline: your total EMIs should not exceed 50% of your monthly in-hand salary. Specifically, home loan EMI should be under 30–35% and all other EMIs combined under 15–20%. Banks typically cap total EMI obligations at 40–50% of gross monthly income during loan approval.