Decoding Banking Jargons: What is Amortization Schedule?
July 12, 2025

Mr. X, a 32-year-old IT professional in Pune, finally decided to buy his dream 2BHK flat. After months of site visits, he zeroed in on a ₹75 lakh apartment and got a home loan of ₹50 lakhs for 20 years at an interest rate of 8% p.a. He decided to make a down payment of the remaining ₹25 lakh from his own pocket.
The bank sent him the approval letter and a document titled: “Loan Amortization Schedule”.
He stared at the sheet filled with numbers and columns titled EMI, Principal, Interest, and Balance—and had no idea what it meant. In this blog, we’ve decoded the meaning of amortization schedule with examples. Let’s dive in!
What is an Amortization Schedule?
An Amortization Schedule is a month-by-month breakdown of how loan gets repaid.
Each EMI he pays is split into:
Mr. X’s Loan Summary:
To know the exact EMI (Equated Monthly Instalment) of your loan, use our online loan EMI Calculator.
The Hidden Story in Numbers
Mr. X’s first 5 EMIs looked like this:
Month | EMI (₹) | Interest (₹) | Principal (₹) | Balance (₹) |
1 | 41,822 | 33,333 | 8,489 | 49,91,511 |
2 | 41,822 | 33,277 | 8,545 | 49,82,966 |
3 | 41,822 | 33,219 | 8,603 | 49,74,363 |
4 | 41,822 | 33,162 | 8,660 | 49,65,703 |
5 | 41,822 | 33,104 | 8,718 | 49,56,985 |
Disclaimer: The above numbers are indicative and is solely for illustration purposes. Please use an EMI calculator to calculate you loan EMI.
Mr. X noticed something shocking. In the first year, over ₹4 lakhs of his payments would go just in interest. Only a fraction would reduce the principal.
Mr. X’s Aha Moment – Prepayment Power
Mr. X decided to consult a financial advisor, who said: “If you prepay ₹5 lakhs in year 3, you could save over ₹8–10 lakhs in total interest and close the loan almost 5 years earlier.”
That’s when he realised amortization is not about repaying the loan; it's about outsmarting the loan. The schedule is a tool, not a trap.
Pro Tip: Before prepaying your loan, learn about the prepayment or foreclosure charges.
How You Can Use Amortization to Win
Just like Mr. X, you too can use the amortisation schedule to:
What Happens If Interest Rates Change?
Mr. x’s friend, Mr. Y had a floating rate loan. When the RBI reduced the repo rate by 0.5%, his EMI schedule was recalculated. With floating rates, the amortization schedule is dynamic.
Mr. X chose a fixed rate for the first 3 years to avoid this uncertainty.
Learnings in a Nutshell
Benefit | Impact |
EMI Split Knowledge | Helps in smart financial planning |
Prepayment Strategy | Saves lakhs in interest |
Tax Optimization (80C & 24b) | Better tax-saving planning |
Understanding Rate Resets | Stay prepared for floating rates |
Closure Readiness | Know exactly when you're debt-free |
Final Thoughts
Your home loan doesn’t have to feel like a burden. With the power of an amortization schedule, it can become your financial roadmap to early freedom. Buying a house has never been this easy! Avail Ujjivan SFB’s wide range of affordable home loan products and enjoy a hassle-free loan journey. From house purchase loan to plot loans and home improvement loans, we have it all! Alternatively, you can browse through Ujjivan SFB product suite - our wide range of financial products are designed to make your financial life better.
Disclaimer:
The contents herein are only for informational purposes and generic in nature. The content does not amount to an offer, invitation or solicitation of any kind to buy or sell, and are not intended to create any legal rights or obligations. This information is subject to updation, completion, amendment and verification without notice. The contents herein are also subject to other product-specific terms and conditions, as well as any applicable third-party terms and conditions, for which Ujjivan Small Finance Bank assumes no responsibility or liability.
Nothing contained herein is intended to constitute financial, investment, legal, tax, or any other professional advice or opinion. Please obtain professional advice before making investment or any other decisions. Any investment decisions that may be made by the you shall be at your own sole discretion, independent analysis and evaluation of the risks involved. The use of any information set out in this document is entirely at the user’s own risk. Ujjivan Small Finance Bank Limited makes no representation or warranty, express or implied, as to the accuracy and completeness for any information herein. The Bank disclaims any and all liability for any loss or damage (direct, indirect, consequential, or otherwise) incurred by you due to use of or due to investment, product application decisions made by you on the basis of the contents herein. While the information is prepared in good faith from sources deemed reliable (including public sources), the Bank disclaims any liability with respect to accuracy of information or any error or omission or any loss or damage incurred by anyone in reliance on the contents herein, in any manner whatsoever.
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FAQs
1. Can I modify my amortization schedule after taking the loan?
Yes. If you prepay or change interest type (fixed to floating or vice versa), the schedule will be updated.
2. Does my amortization schedule show tax-deductible amounts?
No, but it shows interest and principal components that help you calculate deductions under Section 80C (principal) and Section 24(b) (interest).
3. How often does the schedule change in floating rate loans?
Usually at reset intervals—every 6 months or 1 year, depending on your lender’s policy.
4. What’s the difference between amortization and repayment schedule?
They’re often used interchangeably, but amortization specifically shows interest-principal breakdown, while repayment schedule might just show payment dates and EMIs.
5. Does using Excel give the same results as the bank’s amortization schedule?
Yes—if the formulas and values (tenure, rate, EMI type) are accurate.
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