Having a clear understanding of how your loan repayment works is crucial. It prevents you from having default payments, helps you channel your cash flow efficiently, and keeps you from falling into heavy debt.
The repayment structure of a loan is based on the Equated Monthly Instalments (EMIs). Here you repay the loan amount in equal amounts at regular intervals in a fixed period. The EMI is composed of two components – the principal amount and the interest payable. Each EMI has part of both these components. However, its ratio may differ as the repayment progresses. This is no different for Home Loans.
To simplify the Home Loan Payment Schedule, the Amortization schedule was introduced. The schedule gives you a better idea of the payable amount and its due dates.
Let us understand the amortization Schedule further and see how the Home Loan Amortization Calculator can help.
What is Home Loan Amortization Schedule?
The amortization schedule is a periodic table that offers a complete breakage of the housing loan EMI. The table shows the principal amount and the amount of interest, which comprises each payment until you completely pay off the loan.
The periodic payment amount remains the same in total for each period.
How does the amortization schedule work?
An amortization table is a schedule that features monthly loan payments. It shows each amount that goes towards interest and principal.
The best way to understand how the schedule works is to review the table. So, let us take an amortization schedule for INR 250,000 for 20-years with a fixed-rate mortgage with a 4.5% interest rate.
Here is a glimpse of how the columns of the table will look:
Month | Principal + | Interest = | Payment | Total Interest Paid | Total Remaining Balance |
Oct 2021 | INR 462.69 | INR 1,520.83 | INR 1,983.52 | INR 1,520.83 | INR 249,537.31 |
Nov 2021 | INR 465.50 | INR 1,518.02 | INR 1,983.52 | INR 3,038.85 | INR 249,071.81 |
Dec 2021 | INR 468.33 | INR 1,515.19 | INR 1,983.52 | INR 4,554.04 | INR 248,603.48 |
----- | ----- | ----- | ----- | ----- | ----- |
Jul 2041 | INR 1,947.76 | INR 35.76 | INR 1,983.52 | INR 226,009.06 | INR 3,931.13 |
Aug 2041 | INR 1,959.61 | INR 23.91 | INR 1,983.52 | INR 226,032.97 | INR 1,971.53 |
Sep 2041 | INR 1,971.53 | INR 11.99 | INR 1,983.52 | INR 226,044.97 | INR 0.00 |
How does the loan amortization schedule help the borrowers?
Some of the ways in which the loan amortization table helps the borrowers are:
Calculate the total interest borrowers can save if they make additional payments.
Calculate how much financing can they afford by using Reverse engineering for loan payments.
Calculate the total amount of interest paid in a year for tax purposes.
How to use the Amortization calculator?
The Amortization Calculator is an online tool that offers accurate EMI calculations. You need to enter the following details about your loan:
Total loan amount
Tenure of repayment
Interest rate
On entering these details, the calculator will offer detailed data about the repayment, which will include:
Instalment Number – The serial number of the loan EMI and the corresponding repayment data.
Due Date – The date at which your loan EMI is expected to be paid.
Opening Principal Amount – The initial principal amount is considered for interest calculations for that specific EMI.
EMI – The total EMI amount payable for that particular instalment.
Principal Component – The sum of the principal component in the EMI amount.
Interest Component – The sum of the interest payable in the EMI amount.
Closing Principal Amount – The outstanding principal amount after repayment of the due EMI. (Note: the closing principal amount for the month will become the initial principal amount for the following month.)
Interest Rate – Calculates the EMI amount considering the rate of interest per annum.
With HDFC Bank repaying your Home Loan is easier. The bank offers Home Loans at competitive interest rates with flexible EMI options.
Apply for a Home Loan with HDFC Bank by clicking here.
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*Terms and conditions apply. Home Loan at the sole discretion of HDFC Bank limited. Loan disbursal is subject to documentation and verification as per Banks requirement.
