SBI PRE-EMI Calculation

POSTED BY Biswa Singh ON June 30, 2012 5:02 am COMMENTS (9)

Hi Ashal/Manish,

Please give your openion on the below.

I am going to take a loan of 30,00,000 form SBI Max gain. I think I will be able to repay the laon in coming 5 years. I have opted for Pre-emi option because I don’t want to be in cash crunch for coming 2 years i.e. until possession. Here is what i understood of pre-emi:

‘If bank disburses 5,00,000 then I will pay only interest for 5,00,000 that is the disbursed amount. Going forward when bank disburse another 5,00,000 then i will pay interest on 10,00,000. This will continue until i get the possession. So if it takes two year to get possession then i have to pay 2 years of extra interest additionally. After my possession the full EMI will start.”

In SBI the pre-emi is calculated using the formula 30,00,0000 * 30 * 0.105 / 365 = 25,890 (10.5% is the interest rate). This amount is the fixed pre-emi that i have to pay to bank until i get possession and my full emi starts after the possession.

Below is a calculation that I have done:

First Disbursment 5,00,000
==========================

Total Loan Amount = 5,00,000

1st Month
Interest = 5,00,000 * 0.105 / 12 = 4,375
Prinicipal = 25,890 – 4,375 = 21,515
Remaining Loan Amount = 5,00,000 – 21,515 = 4,78,485

2nd Month
Interest = 4,78,485 * 0.105 / 12 = 4,187
Prinicipal = 25,890 – 4,187 = 21,703
Remaining Loan Amount = 4,78,485 – 21,703 = 4,56,782

3rd Month
Interest = 45,6782 * 0.105 / 12 = 3,997
Prinicipal = 25,890 – 3,997 = 21,893
Remaining Loan Amount = 4,5,6782 – 21,893 = 4,34,889

Second Disbursment 5,00,000
===========================

Total Loan Amount = 5,00,000 + 4,34,889 = 9,34,889 (Added Remaining principal carried over from previous disbursement)

1st Month
Interest = 9,34,889 * 0.105 / 12 = 8,180
Prinicipal = 25,890 – 8,180 = 17,710
Remaining Loan Amount = 9,34,889 – 17,710 = 9,17,179

2nd Month
Interest = 9,17,179 * 0.105 / 12 = 8,025
Prinicipal = 25,890 – 8,025 = 17,865
Remaining Loan Amount = 9,17,179 – 17,865 = 8,99,314

3rd Month
Interest = 8,99,314 * 0.105 / 12 = 7,869
Prinicipal = 25,890 – 7,869 = 18,021
Remaining Loan Amount = 9,17,179 – 18,021 = 8,99,158

Observations
===========
– I am paying both the interest component as well as principal component.
– The pri-emi amount is fixed during the pre-emi period.
– The pre-emi is approximately 70% of the actual emi.
– Interes amount decreases in a disbursement cycle.
– Principal amount increases during a disbursement cycle.

Manish,
Please find below the link of the wealth management compy through which i have applied home loan.

http://akshayawealthadvisers.com/

9 replies on this article “SBI PRE-EMI Calculation”

  1. Raj says:

    Hi Guys,

    I have taken SBI Maxgain – HomeLoan with Pre-EMI option.

    Will SBI allow me to repay Principal amount during Pre-EMI or I’m just allowed to park amount and request bank to consider it towards repayment after full disbursement is done. ??

    Can someone clarify this.

  2. Biswa Singh says:

    The whole query chain is about SBI max gain with the original one posted by me. I have taken SBI max-gain loan and i can confirm that after the full disbursement is done (pre-emi or full emi) and after the property is registered you can only deposit any surplus amount to your sbi max-gain account and NOT BEFORE that. Please check with the bank if you need more info.

  3. Nitin Sharma says:

    I am talking in terms of max gain account (SBI). I think we can deposit the surplus amount to maix gain OD account anytime (even in pre-EMI phase), but can’t withdraw it until the full disbursement is made..

    Ashal,
    Can you please comment on it?

    Thanks.

  4. Biswa Singh says:

    You can not deposit surplus amount in any case until the full disbursement of total loan amount is done by the bank. EMI amount does not change in any case only the principal or interest component changes.

  5. nitinsharma85 says:

    Dear Ashal,

    So you mean we can transfer the amount to max gain OD account even in the pre-EMI phase to lower the amount of interest on the amount that is disbursed by bank..If that is case then the pre-EMI will not be the constant/fixed amount as it will vary as per the outstanding balance in the loan account…As I have read in the other threads on this website that SBI asks for PDC for the period of pre-EMI, So will the same amount be deducted from the SB account in this case too or the PDC will be returned back and the new interest will get deducted from SB account ?

    Thanks in advance..
    Nitin

  6. BRSINGH says:

    So Ashal, do you think that SBI max gain pre-emi is not that bad as pre-emi option of other banks who only take interest during pre-emi duration? How paying EMI from my SBI saving account will help? If i transfer my salary to SBI account on 1st of every month and put my surplus amount in the SBI will not it help me?

    1. Dear BRSingh, as the loan for you is a CLP – Construction linked payment. You can deposit surplus amount in Max Gain but can’t withdraw from it till the final disbursement is done. So as of now, park only that much amount in Max Gain, which you ‘ll not require in next 1-2Y time or till completion of your house. It’s advisable to pay EMI from SBI SB account.

      Thanks

      Ashal

      1. BRSINGH says:

        Thanks Ashal.

  7. Dear BRSingh, as your loan is Max Gain. EMI ‘ll be charged for that pre fixed amount, but the interest ‘ll be charged only as per basic calculation of outstanding balance for days & interest there on. So the surplus created by your EMI in Max Gain ‘ll help you to pay lower interest. In between if you park any surplus funds, the interest outgo ‘ll be even lower. For better adjustment & to gain extra, please pay EMI from your SBI saving account only

    Thanks

    Ashal

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