Also called: Equated monthly instalment, Home loan EMI
Equated monthly instalment: the fixed monthly payment that repays a loan's interest and principal over its tenure. Early EMIs are mostly interest; later ones mostly principal.
How it works and what to check
EMI = P × r × (1 + r)^n ÷ ((1 + r)^n − 1), where P is the loan, r the monthly interest rate and n the number of months. On a floating-rate home loan, when the rate changes the bank usually changes the tenure first and the EMI second.
Prepaying reduces the interest you pay. Banks cannot charge prepayment penalties on floating-rate loans to individuals that are not for business.