Buying Home: Understanding the “No EMI till Possession” Scheme

Buying a Home: Understanding the 'No EMI till Possession' Scheme

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Buying a Home: Understanding the 'No EMI till Possession' Scheme

2 min 19 Mar 2025

Highlights:

What is 'No EMI till Possession'
Key Benefits of 'No EMI till Possession'
Things to Consider Before Choosing a 'No EMI till Possession' Scheme

Understanding the various financing options available with a Home Loan can help make the journey smooth. One such option is the 'No EMI till Possession' scheme. Read further to learn what this entails and its implications for homebuyers.

What is 'No EMI till Possession'?

The 'No EMI till Possession,' also known as ‘EMI Holiday,’ scheme is an arrangement among the homebuyer, the lender, and the builder. In this setup, the homebuyer is relieved from making Equated Monthly Instalments (EMIs) typically until they take possession of the property.

Key Benefits of 'No EMI till Possession'

When homebuyers opt for EMI Holiday, they are not required to make loan repayments during the property's construction phase. This allows borrowers to meet other financial commitments easily. Therefore, it helps homebuyers in managing their finances more efficiently while the property is being built.

Things to Consider Before Choosing the ‘No EMI Till Possession’ Scheme

Before opting for the No EMI Till Possession scheme, there are a few important considerations that buyers should be aware of:

Lock-in Period: Some schemes may include a lock-in period during which the buyer may be penalised if they decide to sell the property. Understand the terms regarding this before making an informed decision.
Scheme Duration: The No EMI Till Possession benefit typically lasts for a fixed period. If construction delays occur beyond this period, buyers may become liable for interest payments.
Interest Rate on the Loan: Understand the loan structure and interest rates involved.

Common Misconceptions about the ‘No EMI Till Possession’ Scheme

Only for New Homebuyers: A common misconception is that this scheme is only available to first-time homebuyers. However, several builders offer this scheme to all types of buyers, including those purchasing their second or third property.
It’s Always Interest-Free: Not all No EMI Till Possession schemes are interest-free. Some may involve the builder paying the interest, while in others, the buyer may have to pay both principal and interest during the construction phase. Make sure to clarify the terms with your lender and builder.

How Does ‘No EMI Till Possession’ Work?

The 20:80 Financing Model:

This is a typical model used with No EMI Till Possession schemes. Under this arrangement, buyers pay 20% of the property’s cost upfront to the builder. The remaining 80% of the cost is financed by the lender, and EMIs begin only after the property possession is granted.

The Role of Builders and Lenders:

During the construction phase, either the builder or the lender may cover the EMI payments. In some cases, the builder directly makes payments to the bank on behalf of the homebuyer.

No EMI till Possession’ provides homebuyers with the opportunity to manage their financial commitments efficiently during the property’s construction. By understanding its features and terms, buyers can make well-informed decisions that support their homeownership goals. With the right planning, this option can be a beneficial way to ease into home loan repayments while ensuring financial stability.

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