How Does The EMI Break Up Into Principal And Interest?

Personal Finance

Do you know the interest and principal of your home loan‘s EMI principal and interest breakup? Do you know how each EMI is split between paying off the principal value and interest?

It is essential to know how your EMI breakup calculator is set up. This helps you decide whether or not to repay your loan early, which loan term to choose, along with other things.

In this blog, you will learn how your loan principal and interest amount can be calculated from your EMI. You will also learn the different methods of using an EMI calculator.

Home Loan EMI Calculator

When you pay your EMIs, some of it goes towards interest, and the rest goes toward paying off the loan. Each month, you pay down your loan a little bit, and your home loan principal and interest breakup reduces subsequently. You can use the EMI breakup calculator to find the amount due each month.

The interest on the loan payment will be higher than the principal part, and the rate at which it decreases will also be lower. 

Using an EMI breakup calculator is the best way to calculate your monthly loan payments. Let us learn how.

How Is EMI Calculated?

The principal amount along with the interest rate change with time. The amount of interest is higher in the beginning and gets smaller as time goes on. The EMI breakup calculator is figured out by looking at interest rates, the loan amount, and how long it will take to pay off.

Prepayment Of A Loan With A Long Term

Many people choose loans with terms of 15 to 20 years. This is because they think that their salaries will go up in the next 4 to 6 years, allowing them to pay off the loan early.

In such cases, they pay most of the interest on the loan for the initial few years and not much of the principal.

For example, if you take out a loan for Rs. 30 lakhs for 20 years at 10% p.a. and pay it off in 5 years, you will still owe Rs. 27 lakhs, even though you’ve already paid Rs. 17 lakhs in EMIs. The prepayment penalty would be charged on top of that.

So, if you take out a long-term loan with the idea that you’ll pay it off quickly, you should think again. This makes sense once your house’s value has gone up and you can earn a good profit.

If you take out short-term loans, because they are for a shorter amount of time, a bigger part of your home loan EMI principal and interest breakup. This means you can plan to pay off the loan early if you want to.

Using A Calculator To Compute The Loan Interest And Principal

Here is how to compute your home loan principal and interest breakup manually. All you need is a pen, paper, and a calculator.

Use this formula to figure out your EMI:

EMI = P x [R x (1+R)^n]/[{(1+R)^n}-1]


P = Principal loan amount

R = Periodic interest rate

n = Number of months for making payments

Once you have calculated the EMI, you can use the following formula to calculate the principal with interest for a given month:

Interest component = P x R

Using Excel To Calculate The Principal From The EMI

Use Excel or Google Sheets and type the following formula to find the amount of principal and interest from your monthly EMI:

To calculate the principal for a certain month= PPMT (I,x,n,-p).

To calculate the interest type =IPMT (I,x,n,-p).

You can also figure out your EMI by= PMT (I,n,-p) (I,n,-p)


I= the interest rate each month.

x= month number

e.g., the 1st month, the 10th month, etc.

n= the length of the loan in months.

p= the amount you owe.

Here is an example to help you understand this concept better. Let’s assume the principal is Rs. 10 lakhs. If your annual interest rate is 12% p.a., the monthly rate is 1%.

If the loan will be paid back in 20 years, or 240 months, the EMI will be: =PMT(0.01,240,-1000000), which is Rs. 11,011.

The principal amount for the 10th month is =PPMT(0.01, 10, 240, -1000000), which comes to Rs. 1106.

The interest amount will be=IPMT(0.01, 10, 240, -1000000), which is Rs. 9905.

Summing Up

By now, you should have a good idea of what loan amortisation is and how home loan EMI principal and interest breakup work.  Using an EMI breakup calculator is the best choice to calculate the amount. In this article, it was assumed that the loan was on a “Monthly Reducing Balance.”

It is very important to know how your monthly payment is split between paying interest and the loan’s principal value. The points discussed in the article may help you. Choose your decision wisely.

There are two ways for calculating your home loan EMI principal and interest payment. You can either use a manual EMI breakup calculator or Excel and keep track of your payments.

To learn more about the EMI calculator, visit Piramal Finance and read similar blogs.