Decoding Banking Jargons: What is Amortisation Schedule?
October 09, 2026
Mr. X, a 32-year-old IT professional in Pune, finally decided to buy his dream 2BHK flat. After months of site visits, he zeroed in on a ₹75 lakh apartment and got a home loan of ₹50 lakhs for 20 years at an interest rate of 8% p.a. He decided to make a down payment of the remaining ₹25 lakh from his own pocket.
The bank sent him the approval letter and a document titled: “Loan Amortisation Schedule”.
He stared at the sheet filled with numbers and columns titled EMI, Principal, Interest, and Balance—and had no idea what it meant. In this blog, we’ve decoded the meaning of amortisation schedule with examples. Let’s dive in!
What is an Amortisation Schedule?
You can use a home loan EMI calculator to estimate your monthly repayment based on the loan amount, interest rate and tenure. These estimates can provide useful inputs when you generate your Amortisation schedule separately or review the repayment schedule provided by your lender.
Disclaimer: Calculator results are indicative estimates and do not constitute an amortisation schedule or repayment commitment. The actual EMI, principal-interest allocation and repayment schedule may vary depending on the lender’s calculation method, applicable interest rate, disbursement date and loan terms.
The Hidden Story in Numbers
Mr. X’s first 5 EMIs looked like this:
| Month | EMI (₹) | Interest (₹) | Principal (₹) | Balance (₹) |
| 1 | 41,822 | 33,333 | 8,489 | 49,91,511 |
| 2 | 41,822 | 33,277 | 8,545 | 49,82,966 |
| 3 | 41,822 | 33,219 | 8,603 | 49,74,363 |
| 4 | 41,822 | 33,162 | 8,660 | 49,65,703 |
| 5 | 41,822 | 33,104 | 8,718 | 49,56,985 |
Disclaimer: The above numbers are indicative and is solely for illustration purposes. Please use an EMI calculator to calculate you loan EMI.
Mr. X noticed something shocking. In the first year, over ₹4 lakhs of his payments would go just in interest. Only a fraction would reduce the principal.
Mr. X’s Aha Moment – Prepayment Power
If you prepay ₹5 lakh after completing three years and continue with the same EMI, you could save approximately ₹12 lakh in interest and repay the loan around three years and five months earlier.
These figures are indicative and assume that the interest rate and EMI remain unchanged. Actual savings will depend on when the prepayment is made, the outstanding balance, applicable charges and whether you choose to reduce the EMI or the remaining tenure.
That’s when he realised amortisation is not about repaying the loan; it's about outsmarting the loan. The schedule is a tool, not a trap.
Pro Tip: Before prepaying your loan, learn about the prepayment or foreclosure charges.
How You Can Use Amortisation to Win
Just like Mr. X, you too can use the amortisation schedule to:
What Happens If Interest Rates Change?
Mr. X’s friend, Mr. Y, had a floating-rate loan. When the benchmark linked to his home loan changed at the applicable reset date, the lender revised his repayment schedule. Depending on the loan terms, a change in the applicable interest rate may affect the EMI, remaining tenure or both.
For EMI-based floating-rate personal loans, including home loans, RBI guidelines require lenders to communicate the impact of an interest-rate reset and provide applicable repayment options. These may include increasing the EMI, extending the tenure, using a combination of both, switching to a fixed rate where offered, or making a part or full prepayment.
Mr. X chose a fixed rate for the first three years to obtain greater repayment predictability during that period.
Learnings in a Nutshell
| Benefit | Impact |
| EMI Split Knowledge | Helps in smart financial planning |
| Prepayment Strategy | Saves lakhs in interest |
| Tax Optimization (80C & 24b) | Better tax-saving planning |
| Understanding Rate Resets | Stay prepared for floating rates |
| Closure Readiness | Know exactly when you're debt-free |
Final Thoughts
Your home loan doesn’t have to feel like a burden. With the power of an amortisation schedule, it can become your financial roadmap to early freedom. Buying a house has never been this easy! Avail Ujjivan SFB’s wide range of affordable home loan products and enjoy a hassle-free loan journey. From house purchase loan to plot loans and home improvement loans, we have it all! Alternatively, you can browse through Ujjivan SFB product suite - our wide range of financial products are designed to make your financial life better.
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