Every loan EMI is divided into two parts to ensure that both the interest and the principal amount of the loan are serviced simultaneously. A loan amortization schedule gives a break-up of the loan repayment process.

It displays the EMI classification between the principal and interest components of the loan upon every payment. It also shows the outstanding amount of loan to be serviced.

Usually, initial instalments of the loan tenure contribute more towards interest component of the loan. Once you keep paying instalments, the allocation reverses. The amount allocated towards paying off the principal & interest part varies between lenders & products.

While an EMI calculator would suffice to get a rough estimate of your monthly commitment, an amortization schedule gives a detailed break up the cash outflow, thereby enabling you to plan your finances better.

You can also plan for refinancing (existing terms of the loan are revised) or pre-closure of the loan. However these come at additional charges applicable as per the loan product policy.

Various tax exemptions can be availed, under the following sections of the Income Tax Act:

80C- repayment of the principal component of Home loan
24(b)- Repayment of interest component of Home loan
80EE- Repayment of interest component of home loan for first-time home buyers.