What is a home loan amortisation schedule and how to calculate it?
The home loan amortisation schedule is a detailed chart that clearly highlights key information about your loan and EMIs. This schedule can be calculated by using an amortisation calculator or a home loan EMI calculator, and most lenders will have this provision readily available.
Here is an overview of the information you will get access to through your home loan amortisation schedule.
- Instalment number: Every EMI will have a serial number with payment details in corresponding rows.
- Due date: This is the date on which each loan payment will be due.
- Opening principal: This is the principal amount at the start of each month on which interest will be charged.
- Instalment amount: This is the EMI or monthly repayment amount which can change with interest rate fluctuations.
- The principal amount repayment: This is the EMI component that goes into repaying the principal borrowed.
- The interest component of instalment: This is the EMI component allocated for repaying interest on the opening principal amount. Initially, the interest component makes up a greater portion of the total EMI amount. Steadily, this reduces, and more of the principal gets repaid.
- Closing principal: This is the principal amount that remains to be paid off after the previous EMI payment.
- Interest rate per annum - This is the interest rate per annum or yearly and may vary based on the lender. Home loan interest rate impacts the EMI that you have to pay each month.
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FAQ
An amortization schedule for a home loan is a detailed chart that shows every monthly EMI payment. It breaks each payment into two parts — one for the interest and the other for the principal. This table continues until the entire loan is repaid. It helps borrowers understand how their loan balance decreases over time and track how much they are paying in interest.
A housing loan amortization schedule outlines how much of each monthly EMI goes towards reducing the principal and how much covers the interest. It presents the entire repayment plan month-by-month, showing the loan’s gradual reduction. This schedule offers transparency into the repayment process and helps borrowers monitor their loan progress and make decisions like prepayment or tenure adjustment effectively.
Not quite. EMI is the fixed monthly amount that you pay towards a loan, and it's part of the broader concept of amortization. Amortization is the overall process of reducing your loan through regular EMIs, where each payment covers both interest and principal. So, while EMIs are part of an amortization plan, the two terms are not exactly the same.
Loan amortization is calculated using a formula where the EMI is based on principal, interest rate, and loan tenure. The basic formula is:
EMI = [P x R x (1+R)^N] / [(1+R)^N – 1]
You can also use Excel’s PMT function or an online EMI calculator. The EMI is split into interest and principal components, and this breakdown forms the amortization schedule.
While calculations help you understand loan structures, getting pre-approved can simplify your home buying process significantly. Bajaj Finserv offers quick loan approval with minimal documentation and competitive rates for qualified applicants. Check your eligibility now. You may already be eligible, find out by entering your mobile number and OTP.
Excel provides a built-in function called PMT, which can calculate your EMI based on the loan amount, interest rate, and tenure. The formula behind it is:
[P x r x (1+r)^n] / [(1+r)^n – 1],
where P is the principal, r is the monthly interest rate, and n is the number of monthly payments. This is a handy tool for preparing an amortisation table.
With simple interest, the interest remains the same throughout the loan term, calculated only on the original principal. In contrast, amortization involves EMIs that gradually reduce the interest component while increasing the principal repayment. Over time, you pay less interest and more principal with amortized loans, making them more efficient in the long run.
This means that the loan agreement is valid for 5 years, but the EMIs are calculated as if the loan will be paid off in 25 years. At the end of the 5 years, the balance will need to be refinanced or repaid. This structure helps reduce EMI amounts during the term while allowing flexibility at the end.
Amortization itself isn’t good or bad — it depends on your financial situation. Loans with longer amortization periods offer lower monthly payments, which can be easier to manage. However, they also result in higher interest payments over time. Shorter amortization periods save on interest but require higher EMIs. Choose based on your income and long-term plans.
To calculate amortization, divide your annual interest rate by 12 to get the monthly rate. Multiply your tenure in years by 12 to get the number of EMIs. Then use the standard EMI formula to calculate payments. This breakdown shows how each EMI reduces the principal and how much is paid in interest, forming the amortization schedule.
Monthly amortization means repaying your home loan through fixed EMIs every month. Each EMI includes both principal and interest. Over time, the share of the EMI going towards interest reduces, while the principal share increases. This method helps you gradually reduce your loan balance and eventually repay the entire amount over the chosen tenure.
Understanding monthly amortization helps you choose the right loan tenure for your financial situation. Bajaj Finserv offers flexible EMI options with tenure up to 32 years, allowing you to choose monthly payments that fit your budget comfortably. Explore your home loan options and check your loan offers with Bajaj Finserv today. You may already be eligible, find out by entering your mobile number and OTP.
Amortization methods are used for intangible assets and loan repayments. The three main types are:
Straight-line method – equal repayment amounts over time
Accelerated method – larger repayments early on
Units-of-production method – based on asset usage or output
For loans, straight-line amortisation is commonly used in EMI-based repayment systems.
