diff --git a/fineract-provider/src/main/java/org/apache/fineract/portfolio/loanaccount/service/LoanReadPlatformServiceImpl.java b/fineract-provider/src/main/java/org/apache/fineract/portfolio/loanaccount/service/LoanReadPlatformServiceImpl.java
index b889ad638b7..fab798cdf4a 100644
--- a/fineract-provider/src/main/java/org/apache/fineract/portfolio/loanaccount/service/LoanReadPlatformServiceImpl.java
+++ b/fineract-provider/src/main/java/org/apache/fineract/portfolio/loanaccount/service/LoanReadPlatformServiceImpl.java
@@ -2125,11 +2125,21 @@ private static final class RepaymentTransactionTemplateMapper implements RowMapp
 
         public String schema() {
             // TODO: investigate whether it can be refactored to be more efficient
-            return " GREATEST(loan_transaction.transaction_date, ls.dueDate) as transactionDate,"
-                    + " coalesce(ls.principal_amount, 0) - coalesce(ls.principal_writtenoff_derived, 0) - coalesce(ls.principal_completed_derived, 0) as principalDue,"
-                    + " coalesce(ls.interest_amount, 0) - coalesce(ls.interest_completed_derived, 0) - coalesce(ls.interest_waived_derived, 0) - coalesce(ls.interest_writtenoff_derived, 0) as interestDue,"
-                    + " coalesce(ls.fee_charges_amount, 0) - coalesce(ls.fee_charges_completed_derived, 0) - coalesce(ls.fee_charges_writtenoff_derived, 0) - coalesce(ls.fee_charges_waived_derived, 0) as feeDue,"
-                    + " coalesce(ls.penalty_charges_amount, 0) - coalesce(ls.penalty_charges_completed_derived, 0) - coalesce(ls.penalty_charges_writtenoff_derived, 0) - coalesce(ls.penalty_charges_waived_derived, 0) as penaltyDue,"
+            final String principalDueExpression = "coalesce(ls.principal_amount, 0) - coalesce(ls.principal_writtenoff_derived, 0) "
+                    + "- coalesce(ls.principal_completed_derived, 0)";
+            final String interestDueExpression = "coalesce(ls.interest_amount, 0) - coalesce(ls.interest_completed_derived, 0) "
+                    + "- coalesce(ls.interest_waived_derived, 0) - coalesce(ls.interest_writtenoff_derived, 0)";
+            final String feeDueExpression = "coalesce(ls.fee_charges_amount, 0) - coalesce(ls.fee_charges_completed_derived, 0) "
+                    + "- coalesce(ls.fee_charges_writtenoff_derived, 0) - coalesce(ls.fee_charges_waived_derived, 0)";
+            final String penaltyDueExpression = "coalesce(ls.penalty_charges_amount, 0) "
+                    + "- coalesce(ls.penalty_charges_completed_derived, 0) - coalesce(ls.penalty_charges_writtenoff_derived, 0) "
+                    + "- coalesce(ls.penalty_charges_waived_derived, 0)";
+            final String totalDueExpression = principalDueExpression + " + " + interestDueExpression + " + " + feeDueExpression + " + "
+                    + penaltyDueExpression;
+
+            return " GREATEST(loan_transaction.transaction_date, ls.dueDate) as transactionDate," + " " + principalDueExpression
+                    + " as principalDue," + " " + interestDueExpression + " as interestDue," + " " + feeDueExpression + " as feeDue,"
+                    + " " + penaltyDueExpression + " as penaltyDue,"
                     + " l.currency_code as currencyCode," + " l.currency_digits as currencyDigits,"
                     + " l.currency_multiplesof as inMultiplesOf," + " l.net_disbursal_amount as netDisbursalAmount," + " rc."
                     + sqlGenerator.escape("name") + " as currencyName," + " rc.display_symbol as currencyDisplaySymbol,"
@@ -2137,8 +2147,8 @@ public String schema() {
                     + sqlGenerator.escape("code") + " = l.currency_code" + " JOIN m_loan_repayment_schedule ls ON ls.loan_id = l.id"
                     + " LEFT JOIN (" + " select tr.loan_id, max(tr.transaction_date) as transaction_date" + " from m_loan_transaction tr"
                     + " where tr.transaction_type_enum in (?,?)" + " AND tr.is_reversed = false" + " group by tr.loan_id"
-                    + " ) loan_transaction ON loan_transaction.loan_id = l.id" + " WHERE l.id = ?" + " ORDER BY ls.installment"
-                    + " LIMIT 1";
+                    + " ) loan_transaction ON loan_transaction.loan_id = l.id" + " WHERE l.id = ?" + " ORDER BY CASE WHEN ("
+                    + totalDueExpression + ") > 0 THEN 0 ELSE 1 END, ls.installment" + " LIMIT 1";
         }
 
         @Override
diff --git a/integration-tests/src/test/java/org/apache/fineract/integrationtests/AdvancedPaymentAllocationLoanRepaymentScheduleTest.java b/integration-tests/src/test/java/org/apache/fineract/integrationtests/AdvancedPaymentAllocationLoanRepaymentScheduleTest.java
index 44b674fcb6e..86bac58c042 100644
--- a/integration-tests/src/test/java/org/apache/fineract/integrationtests/AdvancedPaymentAllocationLoanRepaymentScheduleTest.java
+++ b/integration-tests/src/test/java/org/apache/fineract/integrationtests/AdvancedPaymentAllocationLoanRepaymentScheduleTest.java
@@ -445,6 +445,35 @@ public void uc4() {
         });
     }
 
+    @Test
+    public void repaymentTemplateReturnsNextUnpaidInstallmentAmount() {
+        runAt("15 February 2023", () -> {
+            final PostLoansResponse loanResponse = applyForLoanApplication(client.getClientId(), commonLoanProductId,
+                    BigDecimal.valueOf(500.0), 45, 15, 3, BigDecimal.ZERO, "01 January 2023", "01 January 2023");
+
+            loanTransactionHelper.approveLoan(loanResponse.getLoanId(),
+                    new PostLoansLoanIdRequest().approvedLoanAmount(BigDecimal.valueOf(500)).dateFormat(DATETIME_PATTERN)
+                            .approvedOnDate("01 January 2023").locale("en"));
+
+            loanTransactionHelper.disburseLoan(loanResponse.getLoanId(),
+                    new PostLoansLoanIdRequest().actualDisbursementDate("01 January 2023").dateFormat(DATETIME_PATTERN)
+                            .transactionAmount(BigDecimal.valueOf(500.00)).locale("en"));
+
+            loanTransactionHelper.makeLoanRepayment(loanResponse.getLoanId(), new PostLoansLoanIdTransactionsRequest()
+                    .dateFormat(DATETIME_PATTERN).transactionDate("16 January 2023").locale("en").transactionAmount(125.0));
+
+            final GetLoansLoanIdTransactionsTemplateResponse transactionTemplate = loanTransactionHelper
+                    .retrieveTransactionTemplate(loanResponse.getLoanId(), "repayment", DATETIME_PATTERN, "16 January 2023", LOCALE);
+
+            assertNotNull(transactionTemplate);
+            assertEquals(125.0, transactionTemplate.getAmount());
+            assertEquals(125.0, transactionTemplate.getPrincipalPortion());
+            assertEquals(0.0, transactionTemplate.getInterestPortion());
+            assertEquals(0.0, transactionTemplate.getFeeChargesPortion());
+            assertEquals(0.0, transactionTemplate.getPenaltyChargesPortion());
+        });
+    }
+
     // UC5: Refund past due
     // ADVANCED_PAYMENT_ALLOCATION_STRATEGY
     // 1. Disburse the loan