Pre EMI or Full EMI ? Home Loan from SBI of amount Rs 50 Lacs

POSTED BY Arpit Goyal ON April 7, 2014 4:08 pm COMMENTS (3)

Hello All,

I’ve applied for a Home loan of Rs. 50L with SBI. Its a Builder Flat under construction & estimated time of completion as said by builder is March 2016 i.e 23 months later.

Presently I am paying 30 percent of total CP from my funds & 35 percent is going to builder now. Rest amount will be disbursed in stages as per the completion of project.

ROI : 10.15 % & Period of 15 Years.

My Questions are:

1.) Should I start pre emi in this moratorium period of Full EMI from now itself.

2.) If I take pre EMI then monthly amount that i pay to bank will be less & i plan to collect my funds till the next installment & then i pay 30-40 % of amount & rest by the bank. Eventually at every request of money from builder i plan to utilize 30-40 % of my personal funds & remaining amount by bank. So when the building completes my loan amount would have been reduced substantially to somewhere around 35-38 Lakh which would then reduce my EMI as well. ( SBI offers the option of revising EMI twice during the entire loan period free of charge).

3 replies on this article “Pre EMI or Full EMI ? Home Loan from SBI of amount Rs 50 Lacs”

  1. Anand says:

    Go for Full EMI since it will reduce you total interest outgo.

  2. Raja says:

    If possible go for EMI under construction. You will pay full EMI, but interest will be calculated only on the amount disbursed. So you end up paying more principal in the initial stages which will reduce your loan faster.

    If this does not work for you, then pre-EMI is the next approach. This will ensure you have some cash flow in initial years which can be used to pay builder from your own pocket. However, remember that interest you pay at this stage does not do anything to reduce your loan.

    Full EMI or ADF must not be done in any case.

  3. ashalanshu says:

    Dear Arpit, decide the thing based upon your cashflow position.



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