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While a home loan can turn you dream into a reality, there are a number of thing that you need to look at to ensure that the entire process is smooth and hassle-free. Once you are done with choosing a loan provider, and the loan is approved, the next most important thing on your list should be checking the ‘amortisation schedule’.
What is an Amortisation Schedule?
This list contains all the details of your home-loan repayment. It states the principal amount and the interest that you need to pay, along with the EMI. The amount of interest and the principle changes throughout the schedule, even while your EMI remains the same. In the early months, each EMI that you pay has a larger interest component, and a much lower principal amount. As your loan progresses, the interest percentage starts to decrease and the principal amount starts increasing. However, this change between interest and payment does not affect the total amount that you need to pay as per the schedule.
Reading an Amortisation Schedule
It is very important to know how to read this table, in order to have a better understanding of your repayment schedule. The most important terms of an amortisation tables are:
Once your loan is approved, you should go through the amortisation schedule to ensure that you understand your repayment program and structure.
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