Here is an actual calculation of repayment of home loan - my experience - 6 months nightmare:
Our home loan amount(Principle): Rs. 26, 41, 960
Rate of interest offered on documents(June’08): 10.25% per annum floating.
Tenure: 20 years
Bank: ING Vysya
Rate of interest on first EMI(Aug’08)(after desbursement of loan amount): 11%(revised.!)
Rate of interest on Third/Fourth EMI: 11.5%(EMI remains the same; Tenure revised from 240 months(20 years) to 299 months; 1 month discount.!)
EMI paid till date: 6
Principle remaining(after paying 6 EMIs): Rs. 26, 37, 018.4
1 EMI’s cost: Rs. 25, 935
Amount paid till date: Rs. 1, 55, 610
Interest paid till date: Rs. 1, 50, 668.4
Principle paid till date: Rs. 4, 941.6
Principle reducing per month: Rs. 823.6
A New year wish letter received in January’09 saying rate of interest has been revised from 11.5% to 11.25% applicable from Feb’09’s EMI.
This is when most of the nationalised banks(like SBI) are offering 10.25%.
Word of Caution(my learning experience): Do not act in hurry. Take your time to study all options. Its the matter of Lakhs and not thousands. Do not take Big loans like Home loan from Private banks. Go in for Nationalised banks like SBI/PNB. They do take long time to finalise the loan. And The principle reduction funda is the same as shown above(actual computation of my Loan). But they will be the first to act on RBI’s guidelines and reducing the rate of interest as per instructions. 1% on the Principle amount is not much when you are paying such a hefty amount(approx. Rs. 26, 419.60 per annum). But atleast you won’t feel cheated.