1. What is Home Loan Amortization?

Home loan amortization is the process of paying off a mortgage loan over time through regular payments. Each payment covers both interest and principal, with the proportion shifting over time.

2. How Does the Calculator Work?

The calculator uses the amortization formula:

Where:

• \( PMT \) — Monthly payment
• \( P \) — Principal loan amount (INR)
• \( r \) — Monthly interest rate (annual rate divided by 12)
• \( n \) — Number of months (loan term in years × 12)

Explanation: The formula calculates the fixed monthly payment required to fully amortize a loan over its term.

3. Importance of Amortization Calculation

Details: Understanding your amortization schedule helps in financial planning, comparing loan options, and making informed decisions about prepayments or refinancing.

4. Using the Calculator

Tips: Enter the principal amount in INR, annual interest rate in percentage, and loan term in years. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: How does LIC policy affect home loan amortization?
A: LIC policies can be used as collateral or to secure better interest rates, but the amortization calculation remains fundamentally the same.

Q2: What's the difference between reducing balance and flat interest rate?
A: This calculator uses reducing balance method where interest is calculated on the outstanding principal, which is standard for home loans.

Q3: Can I calculate part-prepayment effects with this calculator?
A: This shows standard amortization. For prepayment scenarios, you would need a more advanced calculator.

Q4: Why does most of the early payment go toward interest?
A: In amortization, interest is front-loaded because it's calculated on the higher outstanding principal early in the loan term.

Q5: How accurate is this calculator for LIC policy loans?
A: It provides standard amortization values. For exact LIC policy loan terms, consult your lender as terms may vary.