When you avail of a Home Loan, you must repay the borrowed sum (principal) – with interest – over a predetermined period of time (tenure) through pre-fixed monthly instalments, or EMIs. Each EMI remains the same, but the principal and interest components of each instalment keep changing over the repayment tenure.
The Home Loan amortisation schedule, as the name suggests, is a schedule that lists your Home Loan repayment through EMIs, detailing the breakup of each EMI in terms of the principal and interest component.
Home Loan amortisation refers to the breakup of interest and principal components in each EMI. For any term loan, the interest component remains the highest in the initial EMIs and keeps decreasing over tenure. The principal component increases as one’s loan tenure progress. Due to this balance between these two components, the EMI amount does not vary.
Individuals can find this schedule on their loan-related paperwork. It outlines the entire repayment schedule, along with the division of principal repayment and interest components.
Generally, a Home Loan amortisation schedule is represented in the form of a table. Bajaj Housing Finance customers can check various pieces of information about their existing housing credit on such a table. These include:
- Number of instalments: Each EMI would have a corresponding number against it. Borrowers can use this number to track their instalments alongside the interest and principal component for that month.
- Due date: This is the date of each month within which one must pay the EMI to avoid penalties or late payment charges.
- Outstanding principal: A housing loan amortisation schedule also lists the principal amount outstanding against each month during the loan repayment tenure.
- Closing principal: After paying each month’s EMI, the remaining outstanding principal amount is given in this column.
- Interest component: The interest paid through each EMI is shown on a Home Loan amortisation schedule.
- Principal component: The amount from each EMI that goes toward repaying the principal outstanding is known as the principal component of Home Loan instalment.
An amortisation schedule for a Home Loan is similar to that of other term loans. The only major difference is that since Home Loans have a significant repayment tenure, this repayment table tends to be longer and more elaborate.
A Home Loan amortisation schedule can help borrowers with a clear and predictable picture of how their loan will be repaid over the entire tenure. Though your EMIs may remain specific, the actual allocation of that amount between interest and principal keeps changing. This shift is precisely what the schedule outlines.
In the early stages of your Home Loan, most of your EMI goes toward interest. As the loan matures, the principal repayment amount increases. The amortisation schedule captures this month-wise progression.
An amortisation schedule offers transparency. You can see how much of each EMI goes into interest versus principal, and how much remains to be paid at any given point. Secondly, it supports financial planning. Understanding when most of the principal is repaid, or how much loan balance will remain in a few years, can help you with budgeting for other goals.
Bajaj Housing Finance provides a hassle-free way for individuals to calculate and view an amortisation table for a Home Loan. Simply navigate to our Home Loan EMI Calculator and enter housing loan details, such as loan amount, tenure and rate of interest, to compute such data.
Using a Home Loan amortisation calculator in India is the ideal way to check the liabilities from this credit, even before applying for it. Doing so facilitates ease of financial planning. Such an online tool also helps to determine the best time to avail of a Home Loan Balance Transfer facility on an ongoing housing loan.
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