When availing of a Home Loan, understanding your repayment options can help in managing your finances effectively. For homebuyers, especially those investing in under-construction properties, the choice between pre-EMI and full EMI is important. Let us explore what these terms mean and how they impact your repayment journey.
What is Pre-EMI?
Pre-EMI refers to the interest component of your loan repayment that you pay until the disbursement of the entire loan amount. It is commonly applicable for under-construction properties, where the loan is disbursed in stages based on the property’s construction progress.
Pre-EMI Meaning and Benefits
- Reduced Initial Outflow: Since you only pay the interest, the monthly instalment is lower compared to the full EMI.
- Flexibility: It allows you to manage your cash flow better, especially if you are currently paying rent.
What Does Pre-EMI Mean in Home Loans?
In simple terms, pre-EMI is a temporary phase where the repayment amount is lesser as compared to full EMI. Once the property’s construction is complete and the loan is fully disbursed, you begin paying full EMIs.
Pre EMI vs. Full EMI: What is the Difference?
Pre-EMI | Full EMI |
---|---|
Interest-only payments during the construction phase | Begins once the loan is fully disbursed, covering both principal and interest components |
Suitable for those looking to minimise their monthly outflow initially
| Ideal for borrowers who prefer starting full repayment early to reduce the overall interest cost
|
Understanding Pre-EMI Interest
Pre-EMI interest refers to the amount you pay during the construction period. This is calculated on the loan amount disbursed till date and continues until the property is ready for possession.
How to Choose between Pre-EMI and Full EMI?
The choice depends on your financial situation and long-term goals:
- Choose pre-EMI if you want lower payments during the construction phase.
- Opt for full EMI to save on interest and reduce your repayment tenor.
Bajaj Housing Finance offers flexible Home Loan options with competitive interest rates to suit your needs. Whether it is an under-construction property or a ready-to-move home, we are here to support your dream of owning a home.
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