Escaping the Interest Trap: Why Your Early EMI Payments Don't Lower Your Debt

In the first 5-7 years of a 20-year home loan, up to 80% of your EMI might be going toward interest alone. This is the 'Interest Trap'.

The Amortization Curve

Modern bank loans use front-loaded interest models. By looking at an amortization schedule, you can see that your principal repayment starts small and only accelerates toward the end of the tenure.

Collapsing the Curve with Pre-payments

Paying just one extra EMI per year, or increasing your EMI by 5% every time your salary increases, can reduce a 20-year loan tenure by nearly 5-7 years. Use our Loan Planner to visualize exactly when your pre-payments have the most impact.