Understanding Broken Period Interest and Its Role in
Home Loan Repayments

When it comes to Home Loans, borrowers often focus on EMIs and tenure. But there’s one element that can appear before your first EMI begins — broken period interest, also known as part-period interest. It simply accounts for the number of days between your loan disbursal and the first EMI due date. 

This interest ensures your loan schedule stays accurate and fair — so you pay for exactly the number of days you’ve used the funds (no more, no less). 

What is Broken Period Interest in a Home Loan?

In the context of a regular EMI-based Home Loan (without grace or principal holiday), if the time between disbursal and the first EMI due date is less than 26 days but greater than the First Due Date (FDD) lock-in period of 10 days, then only interest EMI is charged in the upcoming month. 

This is known as Instalment 0, and it consists entirely of Broken Period Interest — no principal component is included. It’s a temporary interest-only payment and is not considered part of your official loan tenure. 

Your regular EMI cycle (with both principal and interest) begins in the next month after Instalment 0. 

The way lenders account for Broken Period Interest can vary across the industry. As per standard practice, Bajaj Housing Finance calculates and adjusts this interest in the manner explained above. 

Understanding Broken Period Interest with an Example

Let’s see how this works in real terms. 

Example:

• Loan disbursed: 18th October 
• First EMI due date: 2nd November 
• Difference: 15 days 

Since 15 days < 26 days and falls outside the FDD lock-in period (23rd onwards), the upcoming EMI (on 2nd November) will include interest only. 

This interest-only EMI is tagged as Instalment 0, and your first full EMI (covering both principal and interest) will begin from 2nd December. 

If the difference between disbursal and first EMI due date is more than 10 days but less than 26, only interest is charged for that interim period. 

Other Common Scenarios Explained

To understand how this rule applies across different dates, here are two quick examples: 

Scenario 1: Loan disbursed on or after 23rd October

• The first EMI would be scheduled in December, not November. 
• The first EMI (in December) will include both the normal EMI and Broken Period Interest, resulting in a slightly inflated EMI. 

Scenario 2: Loan disbursed between 1st and 6th October

• The first EMI will be scheduled for November and will be a regular EMI, including both principal and interest — no separate part-period interest applies. 

These examples help clarify how the number of days between disbursal and the EMI date determines whether a part-period interest is charged separately or merged with your first full EMI. 

Additional details:

• Minimum Interest Days: Always 26 days (configurable as per lender policy) 
• FDD Lock-in: 10 days 
• Cycle Dates: Typically, the 2nd, 5th, or 10th of every month 

Why Lenders Charge Part-Period Interest

Lenders charge part-period or broken period interest to ensure fair interest calculation between disbursal and EMI commencement. Since you start using the loan funds immediately upon disbursal, this interest accounts for those initial days of utilisation. 

It also keeps the EMI schedule consistent — ensuring your first full EMI begins on the standard cycle date without inflating subsequent payments. 

In short, it brings transparency, accuracy, and alignment to your repayment cycle. 

Impact on Home Loan Payments

Part-period interest doesn’t alter your EMI amount or overall loan tenure. It simply ensures your first EMI is aligned with the standard due cycle. 

Borrowers can view Instalment 0 clearly in their: 

• Repayment Schedule, or 
• Statement of Account 

This makes it easy to track and verify the interest-only instalment at the start of the loan. 

How to Manage Part-Period Interest Effectively

A few practical steps can help you plan for it: 

• Understand your EMI cycle before disbursal — if your EMI date is early in the month, you may have a short interest-only period. 
• Time your disbursal — aligning the disbursal closer to the EMI cycle date may reduce the part-period duration. 
• Clarify during approval — ask your lender how the first instalment is being calculated. 

These small checks make your repayment journey smoother and more predictable.