Hi,

I am going for home loan for 30 Lakhs with SBI and the house will be ready for occupation only by Oct 2012. SBI is giving me options to go for either Full EMI from the date of loan sanction or max 18 months moratorium period where I need to pay only Interest. I have following queries on the same (didnot get consistent answers from customer care, branch counsellor ).

1) Bank is going to pay the amount to the builder in installments based on every stage completion. So if I go for moratorium will I be paying the interest for the entire loan amt (30L) from the date of sanction or is the interest will get calculated only for the disbursed amount only ?

2) If I go for full-EMI, again the interest part of the full EMI is for entire amount (30L) or for the amount disbursed only.

3) In either case, can I show this interest for IT excemption ?

Would be great if someone can clarify me on this as I need to plan the EMI accordingly.

Thanks In Advance,

Jegan.

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Dear Jegan, First the Bad news – Till the time the possession of your house is not with you, You can’t claim Income Tax benefit on your home loan.

Good news – No matter you opt for moratorium or full EMI from day one, SBI ‘ll charge you interest only for the disbursed part. Say 5L Rs. today, after 5 months for 12L Rs. & so on……

Your Loan is a CLD – Construction Linked Disbursal of Loan. If your cashflow permits, my take ‘ll be to go for full EMI payment from the day one. Why? Please the recent post of Manish on EMI break up. To make matter simple for you. If your loan term is 20Y & you opt for 18 months moratorium, it means out of 20 years term you are paying only Interest for the first 1.5Year & hence you w’d have only 18.5 years to close your loan & thus your EMI ‘ll be bigger than the full 20Y Loan EMI. On the other hand, if you opt to start your EMI from the day one, due to interest applicable only on the disbursed amount, a good part of your EMI ‘ll go to Principal repayment which ‘ll ultimately bring sown your Interest outgo over the period of loan.

Thanks

Ashal

Hi Ashal,

Thanks for the clarification. My loan counsellor informed me that interest would need to be paid for the full loan amount. Let me discuss with my loan counsellor with your details.

BTW, is there any supporting document I can get in the SBI site to discuss the same with the loan counsellor ?

Thanks a lot again.

Thanks,

Jegan.

Dear Jegan, Some of my friends are running SBI home loan with CLD & till date the interest has been charged only on the disbursed amount. That’s my personal experience.

Regarding any supportive data or fact, please check yourself on SBI site. I’m unable to do so. The reason is due to some technical glitch, SBI site is not opening on my PC.

Thanks

Ashal

Hi Ashal,

Thanks for the details. I got the clarification from my loan counsellor and he confirmed that the interest levied only on the disbursed amount irrespective of whether we go for direct EMI or interest only (as you had confirmed earlier).

Thanks again for the details,

Jegan.

Hi Jegan,

Did SBI ask for post dated cheques?

My case is similar to yours. I have gone for 22L loan for under construction apartment with possession in 2013. In my case, I have opted for 12 months of moratorium period and SBI has asked me for 12 post-dated cheques each with amount equal to monthly interest of 22L (which comes to around 19K).

One important point is if they are getting 19K each month then difference between full-EMI and this payment is very small (less than 20%). Then It will not be a moratorium period in true manner.

Hi,

I applied for 30 L loan with 5month moratorium period., however I asked them to set up ECS equivalent to my EMI amount from 1st month onwards. quick question, how do they charge up the interest part during the moratorium period.?is it simple interest or interest compounded monthly? I got differing answers from them.

Also I assume they consider that the total disbursement is done on the first disbursement and arrive at the interest figure(pre EMI). Now if say 20 L is disbursed on day one and the the rest on month 5. If they calculate interest only on the 20L, then in that case whatever is the excess amount I am paying would be adjusted against the principal amount for these 4 months(till the last disbursement is done).

Please let me know if my understanding is correct. SBI guy mentioned the same , however wanted to double check with you guys, Please advise.

Hi Ashal,

I got loan of 2500000 fom sbi with construction linked payment with moratorium period of 7 months(due to financial constraints).

first disbursement of 430000 is done for now. No emi is deducted as of now either principal or interest.

Could you please let me know if the interest would be charged, and how much, for disbursed amount during moratorium period?

I could not get satisfactory answer in other forums so posting here.

Thanks in advance for your help!

Kumar

Dear Kumar, please park interest amount in your loan account equal to due for 430000 Rs. for the days you used the amount. For example if the disbursal has happened on 17th Dec. 2013 , it means you ‘ll be busing 430000 Rs. loan amount for 15 days. So based upon your rate of interest, calculate the actual interest to be paid for 430000 Rs. for 15 days. Park this much amount into your loan account as simple as that.

Thanks

Ashal

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