Securing Hannav Ledger...
Securing Hannav Ledger...
Glossary
Amortization is the process of spreading loan repayment over time through scheduled principal and interest payments until the debt is cleared.
Amortization is how your loan gets paid off bit by bit each month — the schedule showing principal vs interest every month.
Amortization schedule lists each EMI split. Reducing balance amortization recalculates interest on outstanding principal monthly — standard for Indian home and personal loans. Front-loaded interest means wealth building through prepayment saves disproportionate interest.
Year 1 of ₹30 lakh home loan: total EMIs ₹3.6 lakh but only ₹70,000 reduces principal; ₹2.9 lakh is interest. By year 15, principal portion exceeds interest.
Interest equals rate times outstanding principal. High initial principal makes interest component large; it shrinks as principal repays.
Lump-sum prepayment reduces principal immediately, shortening tenure or lowering future EMIs and total interest substantially.
Lenders provide schedule at disbursal. EMI calculators and loan portals generate schedules from loan amount, rate, and tenure inputs.