Understanding Your Home Loan EMI

Your Equated Monthly Installment (EMI) is the fixed payment you make each month to repay your home loan. It is calculated as EMI = P × r × (1 + r)ⁿ ÷ ((1 + r)ⁿ − 1), where P is the principal, r is the monthly interest rate, and n is the number of monthly payments. Early in the loan most of each payment covers interest; as the balance shrinks, more goes toward principal. Adding an extra monthly payment shortens your payoff time and can save tens of thousands in interest over a 20-year term.