What Is an Amortization Schedule and How to Read It

What Is Amortization?

Amortization is the process of gradually paying off a loan through scheduled payments. Each EMI contains two components:

Interest component — interest on the remaining principal

Principal component — the portion that reduces your debt

In the early months, most of your EMI goes toward interest. As the loan matures, more goes toward principal.

Reading an Amortization Table

A standard amortization table shows, for each month:

Month	Opening Balance	EMI	Interest	Principal	Closing Balance
1	₹10,00,000	₹20,758	₹7,500	₹13,258	₹9,86,742
2	₹9,86,742	₹20,758	₹7,401	₹13,357	₹9,73,385

Notice how the interest component decreases each month while principal rises — this is the amortization curve.

The Front-Loading Problem

Because interest is front-loaded, a ₹10L loan at 9% for 10 years has ₹4.8L in interest in the first 5 years but only ₹1.3L in the last 5 years. This is why prepaying early has a dramatically larger impact than prepaying late.

How Prepayment Works

If you make a ₹1,00,000 prepayment on month 24 of a 10-year home loan at 8.5%:

It is applied entirely to principal

Your remaining balance drops immediately

Future interest is calculated on the lower balance

You save roughly ₹2.5–3L in total interest, depending on timing

Using the Amortization Schedule on This Site

Set your loan inputs and click Calculate

Scroll to the Amortization Table section

Look for the month where the principal component first exceeds the interest component — that is your amortization midpoint

Any prepayment before that midpoint delivers maximum savings