How to Calculate Home Loan EMI and Read an Amortisation Schedule
EMI is a fixed monthly payment, but the split between interest and principal changes every month. Understanding the amortisation schedule is essential before choosing loan tenure or deciding whether to prepay.
EMI formula
1
Typical home loan rate band
8.5–9.5%
Interest share in early years
60–70%
Common tenure benchmark
20 yr
What the data says
EMI = P × r × (1+r)ⁿ ÷ [(1+r)ⁿ − 1], where P is principal, r is the monthly interest rate, and n is the number of monthly instalments.
Worked example: ₹80L loan at 8.75% p.a. (r = 0.0072917) for 20 years (n = 240). EMI works out to roughly ₹70,800 per month, with total interest paid over the tenure exceeding ₹90L.
In an amortisation schedule, the interest component dominates the early EMIs — in Year 1 of the example above, roughly 70% of each EMI is interest, falling below 30% only after Year 15.
Run your exact loan amount, rate and tenure at /knowledge/calculators/emi to see the full month-by-month schedule.
How EstateVeda executes this
Confirm the sanctioned loan amount, applicable interest rate (fixed or floating reset) and tenure.
Generate the full amortisation schedule to see how the principal-interest split evolves year on year.
Model the impact of partial prepayment in specific years on total interest saved and tenure reduction.
Reassess EMI affordability against post-tax rental income if the property is let out.
Risks we underwrite against
Floating-rate resets can raise EMI or extend tenure materially if rates rise 100–150 bps.
Prepaying late in the tenure saves far less interest than prepaying in the first 5 years, since interest share is already low.
EstateVeda verdict
Front-load prepayments where possible — every rupee prepaid in Years 1–7 saves disproportionately more interest than the same rupee prepaid later.
Frequently asked questions
How is home loan EMI calculated in India?
EMI is calculated using the reducing-balance formula P × r × (1+r)ⁿ ÷ [(1+r)ⁿ − 1], applied monthly on the outstanding principal at the applicable interest rate.
Does prepayment reduce EMI or tenure?
Most Indian lenders let the borrower choose; reducing tenure while keeping EMI constant saves more total interest than reducing the EMI amount.
Why is more interest paid in early EMIs?
Interest is charged on the outstanding principal, which is highest at the start of the loan, so early EMIs are interest-heavy and later EMIs are principal-heavy.