EMI on a ₹20 lakh loan at 9.5% for 25 years

A home loan of ₹20 lakh at 9.5% a year for 25 years has an EMI of ₹17,474. Over the whole loan you pay ₹52,42,180, of which ₹32,42,180 is interest. That is 162 paise of interest for every rupee you borrow.

In the first year you pay ₹2,09,687 in EMIs. ₹1,89,120 of that is interest and only ₹20,567 repays the loan, so 90% of your first year’s EMIs goes to interest. After year 1 you still have ₹19,79,433 left to repay.

The EMI stays the same, but its mix changes every month. Principal first becomes larger than interest in year 19 of 25.

If you took the same loan for 20 years instead, the EMI would rise to ₹18,643 but the interest would fall to ₹24,74,230, which is ₹7,67,950 less.

A rate half a point lower, 9%, would make the EMI ₹16,784, which is ₹690 less each month. A rate half a point higher, 10%, would make it ₹18,174.

If you pay ₹1,700 extra every month on top of the EMI, the loan is cleared 6 years 6 months sooner and you save ₹9,93,277 in interest.

Change these numbers in the EMI calculator

Illustration only, not investment, tax or legal advice.