Pre EMI or EMI for SBI Max Gain Loan?

POSTED BY Keyur Jinwala ON December 26, 2013 10:49 pm ONE COMMENT

I have bough an under construction flat to be possesed by Dec 2014. I’ve applied for home loan of 3000000 at interest rate of 10.10% for tenure upto 25 years to SBI (with MaxGain scheme that SBI offers)

Now question is should I opt for Pre EMI or EMI option until I get the possession of the flat.

Lets say following are the disbursements

Jan 2014 – 1500000

Feb 2014 – 500000

Apr 2014 – 500000

Jul 2014 – 250000

Oct 2014 – 250000

Should I go for Pre EMI or EMI?

If I go for EMI option, will I have to start paying full EMI of around 28000 starting from month of Jan 2014? Of this EMI will be only on amount disbursed by then?

If I go for Pre EMI, only interest on disbursement will be payable. But I am not understanding how the interest is calculated. For sure, initially, interest will be less.

But going by above example, by Apr 2014, I would have disbursed 2500000 from SBI. and interest for that would be around 22000 (please correct me if I am wrong or let me know how is that calculated). So I would be paying Pre EMI of 22000 starting from Apr 2014. In that case, is it not a better choice to go for Full EMI of around 28000 – at least that will help reduce Principle and subsequent EMI will reduce as well

Please help me with calculations of both the options. Also can I change option of Pre EMI to Full EMI midway before possession, say in Apr 2014?

One reply on this article “Pre EMI or EMI for SBI Max Gain Loan?”

  1. ashalanshu says:

    Dear Keyur, please opt for full EMI from day one. the full EMI ‘ll help you to cut back your interest pay out. The basic loan repayment from your EMI ‘ll be as per your loan amortization schedule and the saved interest ‘ll be added up automatically in your next month’s available balance and thus reducing your interest outgo even further.

    Thanks

    Ashal

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