Understanding Your Home Loan EMI
Your EMI (Equated Monthly Instalment) has two parts: interest and principal. Early in the loan, most of each payment goes toward interest; as the outstanding balance shrinks, more of each EMI goes toward principal. It's calculated on a reducing balance — interest is charged only on what you still owe, not the original loan amount.
A few ways to bring your EMI down
- A larger down payment reduces the principal you're borrowing against.
- A longer tenure lowers the monthly EMI, though it increases total interest paid.
- A better rate — through a lower CIBIL score risk premium or a balance transfer — reduces both.