Boond
Why the early years feel slow
Your EMI stays the same every month, but what it pays for changes. Interest is charged on what you still owe, so at the start most of the EMI is interest. On a 20-year home loan at 8.5%, about four-fifths of the first year's EMIs go to interest. The chart above shows the switch happening year by year.
EMI = P × r × (1 + r)n ÷ ((1 + r)n − 1)
P is the loan amount, r is the monthly rate (8.5% a year → 0.00708) and n is the number of months.
Home loan EMI at 8.5%
| Loan | 15 years | 20 years | 30 years |
|---|
Popular loan amounts
- ₹10 lakh for 5 years
- ₹20 lakh for 20 years
- ₹30 lakh for 20 years
- ₹50 lakh for 20 years
- ₹50 lakh for 30 years
- ₹1 crore for 20 years
- All loan amounts
Questions
Is it better to lower the EMI or the term after prepaying?
Keeping the EMI and cutting the term saves far more interest. Banks often lower the EMI by default after a part-payment, so ask them to reduce the tenure instead if you can afford it.
Can banks charge for prepaying?
For floating-rate loans taken by individuals, RBI rules don't allow foreclosure or prepayment charges. Fixed-rate loans can carry a charge, so check your agreement.
Why is my bank's EMI slightly different?
Banks may round the rate, count days differently, or start the EMI after a broken period. The difference is usually a few rupees.
Does Boond save what I type?
No. The maths runs in your browser. Nothing is sent anywhere.
Boond is a calculator, not financial advice. Figures assume a fixed rate for the whole term; floating rates change.