how the EMI (Prinicpal+Interest) is calculated in Construction Linked Plan

POSTED BY Nazeer Hussain ON October 22, 2012 1:53 pm COMMENTS (4)

how the EMI (Prinicpal+Interest) is calculated in Construction Linked Plan. ANy one ?

I wish to know how the EMI (Prinicpal+Interest) is calculated in Construction Linked Plan of SBI Maxgain.

I have booked a flat in Pune, the cost of the flat including evertyhing (basic cost + stamp duty + registration + vat + service tax) comes to around
56 Lacs  (56,001,65 to be exact).
I have already paid around 20% of the agreement amount to the builder around 11.3 lacs.

I am planning to take a SBI loan of 44.7 lacs
with a ROI of 10.15% , my EMI comes to 43.5 K

The flat is under construction and the posession will be given by the builder in Jan 2014 (but as expected the possesion may delay by 4-6 months)

Construction is nearly 40% complete and the builder says, he will raise a demand code as and when required to SBI and get the payment.

I assume, the full disbursement of the loan will happen in the next 12-14 months

I plan to go for full EMI (43.5K) payment, right from day one

My question is
1) which is beneficial Full EMI or pre-EMI ?
2) in case of Full EMI, what would be the principal+interest component out of the 43.5 K EMI

If I can get an excel sheet with some calculations, I can tweak it later for my benefit

thanks in advance

Nazeer Hussain

4 replies on this article “how the EMI (Prinicpal+Interest) is calculated in Construction Linked Plan”

  1. Nazeer Hussain says:

    Thanks
    that was simple to understand

    thanks again
    Nazeer

  2. Dear Nazeer, please opt for full EMi from day one. You ‘ll be able to save a lot on interest outgo. I’m giving a very crude example for you to understand it. Let’s say 1st disbursal by SBI is for 10L Rs. now after 1 month, the interest amount comes out around 9000 Rs. on this 10L Rs. So out of your EMi amount of 43K Rs. roughly, SBI ‘ll charged 9k interest & remaining 34K Rs. ‘ll be adjusted towards principal. so in next month, your O/S Loan amount ‘ll come down from 10L Rs. to 9.66L Rs. Now the next to next month’s interest ‘ll be charged on 9.6L Rs. & the adjustment ‘ll be done towards principal accordingly.

    In between as & when next disbursal is done, the interest calculation ‘ll change & accordingly the principal part of your EMi ‘ll also change.

    Hope it clarifies you the calcualtion part.

    thanks

    Ashal

  3. Nazeer Hussain says:

    Thanks,
    I updated my problem description, hopefully will give a better idea of what I am referring to

    ~Nazeer

  4. I am not sure if the accurate method is there or not, but you should go by the first principles,.

    You can put the outstanding principles for each month and finally find out the “equivalent” amount which needs to be paid each month which is equal to the cash flows .

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