Your home loan EMI schedule is one of the most important pieces of information your lender can give you, but a lot of people don’t make use of it properly. This piece of information gives you a whole roadmap, showing how every EMI payment reduces the principal and interest, which is why it’s important to go through it thoroughly and keep checking it regularly.
Why Does the Schedule Matter
An EMI schedule or amortisation table lists each instalment over the whole loan tenure. The columns generally are for opening balances, EMI, interest options, principal, and closing balance. The EMIs paid earlier will mostly go to the interest, but later, the EMIs pay down the principal faster, which is normal amortisation.
Quick Checklist (How to Read Each Column)
- Month No.- This column tells you which EMI you’re on.
- Opening Balance- It tells you the principal outstanding amount before you pay off the EMI.
- Interest- This shows you the amount of interest charged that month, which is calculated based on the opening balance and monthly rate.
- Principal: This is EMI minus interest, and the amount is subtracted from your opening balance.
- Closing Balance: This is the amount that remains after you make the payment.
Make sure to always check the schedule, especially if you have a floating interest rate as your repayment can fluctuate a lot even in case of minor changes. This is also why choosing your lender carefully is crucial. Trusted financial institutions like PNB Housing ensure that the entire process of borrowing and repayment is transparent, so you can plan accordingly and have a stress-free experience.
Steps to Use the Schedule to Save Money
- Spot the interest-heavy period: The first few years are very interest-heavy, which is where prepayments come in; they give the largest interest savings.
- Simulate prepayments: Pick one prepayment at a time and then ask your lender for a revised schedule. Once this is done, you will see the interest drop significantly.
- Check for clauses: Look out for prepayment charges, reset dates, and any automatic EMI re-calculation lines.
- Watch rate changes: For floating rate loans, your lender needs to show the rest dates and the revised EMIs.
- Use the schedule for tax planning: If you need bigger interest outflow during a specific year, then the schedule can help plan out your prepayments.
What If Scenarios
- What if I prepay 3 Lakhs in the 5th year of my loan? Then you ask your lender for a revised EMI schedule, usually your tenure shortens, and it can take lakhs off your interest.
- What if the rates fall by 0.5%? For floating loans, your repayment will change and you will likely get lower EMI or reduced tenure. Once your lender has given you the revised schedule, you can decide which one of the options saves you more money.
The best and clearest way to see interest vs principal over time is by checking out your home loan schedule. When you put in small prepayments early, it gives you bigger savings on interest. Use online calculators to see how your prepayments will affect your overall interest for the loan.
