How it works
The instalment is set so the loan closes exactly at the end of the tenure. Interest each month is charged only on the balance still outstanding, so as the balance falls the interest portion of the same fixed instalment falls with it.
On a typical twenty-year housing loan the first instalment is around 80% interest. The crossover — the month where more of your payment goes to principal than to interest — usually arrives somewhere around the middle of the tenure, and the amortisation schedule below shows exactly when for your numbers.
More detail
Because the balance stays high for so long, small changes to the rate move the total interest a great deal. The rate scenario shows the effect of half a percentage point either way, which is often larger than borrowers expect.
The calculation assumes a fixed rate throughout. Most Indian home loans are floating, linked to an external benchmark such as the repo rate, and reset periodically — which is why it is worth re-running these numbers after any reset.
To see what paying extra would save on a housing loan, use the prepayment calculator.
For a loan of any other kind, the general EMI calculator covers wider ranges.