EMI on a ₹30 lakh loan at 8.75% for 30 years

A home loan of ₹30 lakh at 8.75% a year for 30 years has an EMI of ₹23,601. Over the whole loan you pay ₹84,96,364, of which ₹54,96,364 is interest. That is 183 paise of interest for every rupee you borrow.

In the first year you pay ₹2,83,212 in EMIs. ₹2,61,649 of that is interest and only ₹21,563 repays the loan, so 92% of your first year’s EMIs goes to interest. After year 1 you still have ₹29,78,437 left to repay.

The EMI stays the same, but its mix changes every month. Principal first becomes larger than interest in year 23 of 30.

If you took the same loan for 25 years instead, the EMI would rise to ₹24,664 but the interest would fall to ₹43,99,293, which is ₹10,97,072 less.

A rate half a point lower, 8.25%, would make the EMI ₹22,538, which is ₹1,063 less each month. A rate half a point higher, 9.25%, would make it ₹24,680.

If you pay ₹2,400 extra every month on top of the EMI, the loan is cleared 8 years 10 months sooner and you save ₹19,08,331 in interest.

Change these numbers in the EMI calculator

Illustration only, not investment, tax or legal advice.