An EMI of ₹50,00,000 for 20 years at 8.5% works out to ₹43,391.
EMI = P × r × (1 + r)^n ÷ [(1 + r)^n − 1], where P = loan amount, r = monthly interest rate (annual rate ÷ 12 ÷ 100), n = tenure in months
| Input | Value |
|---|---|
| Loan Type | Home Loan |
| Loan Amount | ₹50,00,000 |
| Annual Interest Rate | 8.5% |
| Loan Tenure | 20 yr |
| Monthly EMI | ₹43,391 |
| Total Payment | ₹1,04,13,879 |
| Total Interest | ₹54,13,879 |
| Interest Ratio | 108.3% |
| Principal | ₹50,00,000 |
| Interest > Principal after | 13 yr |
How your EMI is calculated
An EMI is engineered so that one fixed monthly payment repays the entire loan plus interest by the last instalment. Early EMIs are mostly interest (the outstanding balance is largest at the start); later EMIs are mostly principal — which is why prepayments hurt the bank and help you most in the early years.
Should I prepay my loan or invest the money instead?
Compare the loan rate against a realistic after-tax investment return: prepaying a 9% loan is a guaranteed, risk-free 9% — hard to beat with taxable investments. High-rate debt (cards, personal loans) should always be cleared first; for a low-rate home loan, long-horizon equity investing can reasonably win, and many households sensibly do half-and-half.
Why does my EMI barely reduce my principal in the first years?
Because interest is charged on the outstanding balance, which is at its maximum early on — so most of each early EMI goes to interest. On a 20-year loan, it typically takes 12-13 years before you’ve repaid even half the principal. This amortisation shape is exactly why early prepayments are disproportionately powerful.