What Does The Amortization Table In An EMI Calculator Mean?
The amortization table is a schedule of the repayments that you will make over the course of time. This is a detailed understanding of the EMIs, the principal amount repayment and the interest amount repayments for your loan. Let’s understand this concept in thorough detail.
What is an Amortization table?
This is a tabular view of your EMIs over the course of the home loan tenure. In simple terms, every EMI is divided into two parts – the principal and the interest amount. So, you can see how much of each month’s EMI is used for the principal as well as the interest amount. While calculating the monthly home loan EMIs, you can find the amortization table displayed in certain EMI calculators.
What is the main use of the Amortization table?
All housing loan EMI calculators in India do not host this table; although, the advanced ones do. The main use of this table is for the home loan calculations so that you understand the division of the principal amount and the interest amount over time. Most banks and housing finance companies create the repayment schedule that show the repayment of the principal amount over the course of time, while repaying small portions of the interest. Then, you will complete the term by repaying the interest, while paying the pending portion of the principal amount.
You can foresee how you will repay the loan on a month-to-month basis, which is a very useful insight into your financial life. It is, actually, more important as these amounts vary over time.
What are the other advantages of the table?
Since these amounts are also part of your tax rebate, you can use these numbers to calculate the tax benefit you can enjoy annually. Though you will need to consult a tax consultant, the tax rebate applicable on the principal amount and the interest is different. This table will be pretty useful, for sure.
The truth is; this table represents the standard repayment option. If you do not find it comfortable, there are several choices available today. So, take a look at your typical monthly expenses and pending savings over the years to find the most suitable repayment option. Though these details are not shown in the table, you can use a home loan calculator to identify any potential changes that you need to make.
So, use all these features of the perfect home loan EMI calculator and explore them to their fullest value before availing a housing loan.
