Your EMI stays the same every month, but what it pays for changes: in the early years most of it is interest, later most of it repays the loan. That is why a prepayment in the first few years saves so much interest - it removes principal that would have been charged interest for the longest time.
When the rate changes, Indian banks usually keep the EMI and change the tenure. Pick either behaviour under 'After a rate change' to see both.
How it is worked out
EMI = P × i × (1 + i)n / [(1 + i)n − 1], where P is the loan, i the yearly rate ÷ 12 and n the number of months.
Questions
Should I prepay or invest instead?
Prepaying earns you exactly the loan's interest rate, risk-free. Investing may earn more but is not certain. Many people prepay early in a home loan and invest once the rate gap is clear. This calculator shows the saving so you can compare.
Does it include processing fees or insurance?
No - only the EMI, interest and principal. Floating-rate home loans usually have no prepayment charge; fixed-rate and some other loans may.
Why does my bank's figure differ slightly?
Banks may round the EMI up to the next rupee and charge interest by days in the month. The difference is usually a few rupees.