Loan Amortisation Schedule Calculator with Prepayment

What an Amortisation Schedule Really Shows You

An amortisation schedule is the month-by-month, or year-by-year, story of how your loan is repaid. Every EMI you pay is split into two parts: a slice that covers the interest for that period, and a slice that reduces the principal you still owe. The schedule lays out that split for every instalment, along with the balance remaining after each one. It is the single most revealing document about a loan, and understanding it changes how you think about borrowing and repaying. Most borrowers never look at it beyond glancing at the EMI, which is a little like buying a house having read only the monthly rent and never the price.

The most important thing the schedule reveals is the front-loading of interest. Because interest each month is charged on the outstanding principal, and your principal is at its highest at the start, the early EMIs are overwhelmingly interest and barely touch the principal. On a twenty-year home loan, a large part of your first year’s EMIs goes to the bank as interest, with only a sliver reducing what you owe. As the years pass and the balance falls, the mix flips: the interest slice shrinks and the principal slice grows, so the loan pays down faster and faster towards the end.

This front-loading has a profound practical consequence: prepaying early is dramatically more powerful than prepaying late. A rupee of prepayment in year two removes principal that would otherwise have accrued interest for eighteen more years, so it saves a great deal of interest. The same rupee prepaid in year eighteen saves only two years of interest. The schedule makes this visible, and it is why every sound piece of advice about loans stresses acting early. Seeing your own numbers laid out, rather than reading the principle in the abstract, is what turns the insight into action.

The schedule also shows you the total cost of the loan in a way the EMI alone never does. A comfortable-looking monthly EMI can conceal a total interest bill that rivals or exceeds the amount you borrowed, especially on a long tenure at a high rate. When you see, year by year, how much of your money goes to interest, the true price of the loan becomes concrete, and it often prompts better decisions: a shorter tenure, a larger down payment, or a commitment to prepay. This tool builds that full schedule for you and, crucially, lets you test how an extra payment reshapes it.

There is a subtler benefit to seeing the schedule laid out: it corrects the intuition that repayment is linear. Most people imagine that halfway through a loan’s term they must be roughly halfway through paying it off, but the front-loading of interest means the outstanding principal is far higher at the midpoint than that instinct suggests. On a twenty-year loan you may still owe well over half the principal after ten years. This matters if you ever plan to sell the asset, refinance, or foreclose, because the amount you would need to clear is larger than you expect. The schedule replaces a comforting but wrong mental model with the real numbers, so your plans, whether to prepay, to sell, or simply to understand where you stand, rest on fact rather than a linear guess.

Reduce Tenure or Reduce EMI: The Choice That Matters

When you make a part-prepayment on a loan, the lender can apply it in one of two ways, and the difference between them is large. The first is to keep your EMI the same and shorten the tenure, so the loan closes earlier. The second is to keep the tenure the same and lower your EMI, so your monthly outgo falls. Both reduce your total interest, because both cut the outstanding principal, but they do so by very different amounts, and choosing well is worth a substantial sum.

The confusion is understandable, because both options feel like progress and both do genuinely help. The trap is assuming they are equivalent, or that the lender will automatically give you the one you had in mind. In reality the gap between them, over the life of a large loan, can run to lakhs of rupees of interest, so this is not a minor administrative choice but one of the more consequential financial decisions you make about the loan. Getting it right starts with understanding what each does, which is where seeing both outcomes side by side, rather than reasoning about them in the abstract, makes the decision clear.

Reducing the tenure almost always saves more total interest. Because you keep paying the same, comfortable EMI, the extra prepayment plus the unchanged instalment attack the principal aggressively, the loan closes years sooner, and interest stops accruing much earlier. Reducing the EMI, by contrast, keeps you in debt for the full original tenure, so interest continues for just as long, only on a slightly smaller balance. The total interest saved is real but noticeably less than the tenure route. As a rule, if your current EMI is comfortable, reduce the tenure; you will be debt-free sooner and pay far less overall.

Reducing the EMI is the right choice only when your monthly budget is genuinely stretched. Lowering the instalment frees up cash every month, which can matter more than the extra interest saving if your finances are tight or your income is uncertain. It is a liquidity decision rather than a cost-minimising one. There is no universally correct answer; it depends on whether your priority is paying the least total interest or easing your monthly cash flow. This tool shows you both outcomes so you can decide on your own numbers rather than a generic rule.

There is a crucial Indian-market catch that traps many borrowers, and the tool flags it. When you make a part-prepayment, most Indian lenders default to reducing the tenure and do not automatically lower your EMI. If you actually wanted the lower EMI, you must explicitly request an EMI recalculation from the lender; otherwise you will simply get a shorter tenure by default. Borrowers who assume their EMI will fall after a prepayment, and do not ask, are often confused when it does not. Knowing this in advance lets you tell the lender exactly what you want, rather than being surprised by the default.

For most borrowers, this default actually works in their favour, which is a quiet piece of good news. Since reduce-tenure saves more total interest, a lender that defaults to it is, in effect, steering you towards the cheaper outcome unless you choose otherwise. The problem only arises for the borrower who genuinely needs the lower monthly payment and does not realise they have to ask for it. So the practical rule is simple: if your budget is comfortable, do nothing special and enjoy the tenure reduction; if your budget is tight and you need the EMI down, put your request for recalculation in writing at the moment you prepay, and keep the acknowledgement. Either way, decide deliberately rather than discovering the default after the fact.

How the Schedule and Prepayment Figures Are Built

The tool constructs the schedule exactly as a bank would, then layers your prepayment strategy on top, in four steps.

Step one: compute the EMI

From your loan amount, rate and tenure, the tool computes the EMI using the standard reducing-balance formula, the same one every Indian bank uses. This is the level monthly payment that will clear the loan over the tenure, with interest charged each month on the outstanding balance. It is the anchor for the whole schedule, and every other figure in the table follows from it.

It is worth stressing that the tool uses the reducing-balance method throughout, never a flat rate. A flat-rate quote, which some lenders and brokers use to make a loan look cheap, charges interest on the full original amount for the whole tenure regardless of how much you have repaid, and its effective cost is far higher than the stated number, often close to double when converted to a reducing-balance equivalent. Because this schedule is built on reducing balance, the EMI, the interest split and the totals it shows are the honest ones your bank will actually apply, so you can trust them for planning and use them to see through any misleadingly low flat rate you are offered elsewhere.

Step two: build the amortisation table

It then steps through the loan month by month. For each instalment it calculates the interest on the current balance, subtracts that from the EMI to find the principal repaid, and reduces the balance accordingly. It rolls these months into year-by-year rows for readability, showing the principal paid, interest paid and closing balance for each year. The final instalment is trimmed so the balance clears exactly to zero, just as a real loan closes.

Rolling the months into years is a deliberate readability choice. A twenty-year loan has two hundred and forty instalments, and a table that long is more overwhelming than illuminating; grouping them into twenty annual rows lets you see the shape of the repayment, the interest falling and the principal rising, at a glance, without scrolling through hundreds of near-identical lines. The downloadable PDF carries the same year-by-year view so you have a clean record to keep or share with a co-borrower. If you ever need the exact figure for a specific month, your lender’s statement provides it, but for understanding and planning, the annual rollup is the right level of detail.

Step three: apply the extra payment

If you choose reduce-tenure, the tool adds your extra amount to the principal portion of every EMI, so the balance falls faster and the loan closes early; it then reports how many months you save and how much interest. If you choose reduce-EMI, it applies your lump sum after the first year and recomputes a lower EMI over the remaining original tenure, showing the reduced monthly figure. This is where the two strategies visibly diverge.

The two modes are deliberately modelled the way borrowers actually use them. A reduce-tenure prepayment is most natural as a steady monthly extra, an amount you commit to paying on top of your EMI from regular income, so the tool treats it that way and compounds its effect month after month. A reduce-EMI decision, by contrast, is usually triggered by a one-time windfall, a bonus or a maturing investment, that you want to use to lighten your monthly load rather than to finish early, so the tool applies it as a lump sum and then lowers the instalment. Matching the model to how the money really arrives makes the comparison honest and the numbers directly usable in your own planning.

Step four: show the totals and the chart

Finally it presents the headline numbers, your EMI, total interest, total repayment and the interest share of everything you pay, alongside a stacked chart of principal versus interest each year that makes the front-loading of interest impossible to miss. Together with the year-by-year table, this gives you a complete, honest picture of the loan and the effect of prepaying.

The interest-share figure deserves special attention, because it reframes the loan in a single number. Told that a fifty lakh loan carries, say, forty-odd lakh of interest over twenty years, many borrowers are genuinely shocked, having focused only on the manageable monthly EMI. Expressing that as a share, close to half of everything you hand over going to interest rather than to owning the asset, is a blunt, useful truth. It does not mean borrowing is wrong; a home loan is often the only way to buy a home, and the alternative of renting has its own cost. But seeing the interest share honestly equips you to make the decisions that reduce it, borrowing a little less, choosing a shorter tenure, or prepaying, rather than drifting through the loan unaware of its full price.

Amortisation Concepts and Prepayment Rules for 2026

These reference points help you read your own schedule and plan prepayments. Loan-specific rules, especially prepayment charges, vary by lender and product, so confirm your terms with the bank.

How the EMI splits over time

Reduce tenure versus reduce EMI

Prepayment charge rules of thumb

Three Worked Examples From Real Borrowers

Here are three borrowers using the schedule to make a prepayment decision.

Arjun sees the front-loading in Mumbai

Arjun has a fifty lakh home loan at nine per cent over twenty years, with an EMI around forty-five thousand. On the tool, the year-by-year schedule stops him in his tracks: in the first year, the overwhelming majority of his EMIs go to interest, and his outstanding balance has barely moved. Seeing that the total interest over the loan approaches the principal itself, he resolves to prepay whenever he can.

The schedule turned an abstract worry about his loan into a clear, motivating picture, and Arjun starts routing his annual bonus into prepayment from year one, exactly when it does the most good. What struck him most was the stacked chart: the towering red interest bars in the early years, shrinking steadily as the blue principal bars grow, made the front-loading impossible to ignore in a way a single EMI number never had. He had assumed that halfway through a twenty-year loan he would owe roughly half the principal; the schedule showed the balance was far higher than that at the ten-year mark, which sharpened his resolve to attack the loan early rather than coasting.

Priya chooses reduce-tenure in Bengaluru

Priya, with the same fifty lakh loan, can comfortably afford an extra ten thousand a month. On the tool she selects reduce-tenure and enters the extra amount. The result is striking: paying that extra alongside her normal EMI closes the loan several years early and saves a large sum in interest, far more than she expected from what feels like a modest monthly top-up. Because her EMI is comfortable, the tool confirms reduce-tenure is the right route for her.

She sets up the extra payment as a standing instruction, knowing every month of it is buying her years of freedom from the loan. The insight that convinced her was the leverage of the extra amount: ten thousand a month is a small fraction of her forty-five thousand EMI, yet because it goes entirely to principal, it compounds into years of avoided interest. She also noted the tool’s reminder that in India this extra payment would, by default, shorten her tenure rather than cut her EMI, which was exactly what she wanted, so she did not need to make any special request to the lender.

Rakesh needs reduce-EMI in Chennai

Rakesh receives a five lakh bonus but his monthly budget is tight after a job change, so he wants breathing room rather than an early payoff. On the tool he selects reduce-EMI and enters the lump sum. It shows his EMI falling meaningfully after the prepayment, easing his monthly cash flow, though it saves less total interest than the tenure route would.

Crucially, the tool reminds him that his lender will reduce the tenure by default, so he must explicitly ask for an EMI recalculation. Forewarned, Rakesh submits the prepayment with a clear written request to lower the EMI, and gets the outcome he actually needed rather than the default. His case is the mirror of Priya’s and shows why there is no single right answer: for Priya, with a comfortable budget, minimising total interest was the goal, so reduce-tenure won; for Rakesh, easing a stretched monthly budget mattered more than squeezing out the last of the interest saving, so reduce-EMI was right, provided he asked for it. The tool served both by showing the trade-off rather than pushing one strategy.

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