When you repay a home loan, you do not repay just the amount you borrowed, but also the interest charged by the lender. While the rate of interest varies from lender to lender, it is also determined by numerous other factors such as your credit score, monthly income, other liabilities, and more.
If you wish to repay the loan through a standard monthly repayment schedule, the example below will help you understand how the repayment works.
Example: Let’s say you take a home loan of ₹10 Lakhs with an interest rate of 6.5% p.a. for a tenure of 5 years. Now, you will have to pay a fraction of the principal amount and a fraction of the interest amount every month as per the amortisation schedule (EMI schedule) decided by the bank.
The following table illustrates how much of the principal amount and the interest amount you will be paying to the bank every year:
Tenure |
Principal Amount |
Interest |
Balance Amount |
Year 1 |
₹1,68,296 |
₹45,138 |
₹8,31,702 |
Year 2 |
₹2,37,513 |
₹47,067 |
₹5,94,190 |
Year 3 |
₹2,53,418 |
₹31,162 |
₹3,40,772 |
Year 4 |
₹2,70,392 |
₹14,188 |
₹70,381 |
Year 5 |
₹70,381 |
₹764 |
₹0 |
A home loan repayment schedule or amortisation schedule is the determined timeline of EMI payments. It stipulates the amount that you will be paying to the bank/NBFC every month till the maturity of the loan.
You can claim a tax deduction of up to ₹1.5 Lakhs on the principal repayment portion of the EMI under Section 80(C) of the Income Tax Act, 1961. Also, a deduction of up to ₹ 2 Lakhs on the interest portion of the EMI under the Section 24(B) of the I-T Act.
A home loan provisional interest certificate is proof of payment of loan EMIs by the borrower. The certificate has the summary of all the EMIs paid by the borrower indicating the principal and the interest components of the EMI separately.
The foreclosure month is the month in which you choose to repay the entire outstanding loan amount, prior to the end of the loan tenure.