Calculation of Pre-EMI interest on home loan by bank/financial institutions

POSTED BY SUDHIRBELOSE ON March 30, 2012 2:46 pm COMMENTS (3)

Hello,

Brief :

I have applied with HDFC for home loan 32L @ 10.75% floating interest rate. Am buying Re-sale property. Before I avail first & final disbursement, have following queries :

Am ready with all docs. required for disbursement by bank and have chosen 15th of every month as EMI Date. Bank says if I take disbursement anytime in April 2012, they will charge me Pre-EMI interest on balance number of days i.e. for e.g. if I take disbursement on 07 april 2012, then they will charge me Pre-EMI interest for 23 days and my regular EMI will start from 15th May 2012. However, I am of opinion that Bank should charge me Pre-EMI interest for 8 days i.e. till 15th April 2012 and my EMI shall start from 15th May 2012.

Hence, I want to know how banks calculate Pre-EMI interest on amount disbursed ?

Thanks in advance,

Sudhir Belose

3 replies on this article “Calculation of Pre-EMI interest on home loan by bank/financial institutions”

  1. SUDHIRBELOSE says:
    March 30, 2012 at 3:14 pm

    HI Ashal
    Thanks for your quick and valued response

    But HDFC, FAQ section (http://www.hdfc.com/others/home_loan_faqs.asp#7) quotes “Pre-EMI interest is payable every month from the date of each disbursement upto the date of commencement of EMI”

    So going by this am I right in interpretating that I should be charged for 8 days considering my EMI Date as 15th and I have taken disbursement on 07th.

    Regards/Sudhir

    Reply
    1. ashal jauhari says:
      March 31, 2012 at 3:03 pm

      Dear Sudhir, Please read your reply again. From your own reply as the EMI commencement date is 15th May, so the Pre EMI interest should be charged for 23+15 = 38 days & not the 23 days as HDFC people are asking you to do?

      Thanks

      Ashal

      Reply
  2. ashal jauhari says:
    March 30, 2012 at 2:57 pm

    Dear Sudhir, As you are taking disbursement on 7th of April, 2012, HDFC is charging you the interest for the month of april. From May 2012, onwards, the regular EMI ‘ll take care of. In case you are not satisfied with the situation, I w’d ask you to opt for disbursement around 20-25th April.

    Thanks

    Ashal

    Reply

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