When Does Home Loan EMI Starts

Home loan equated monthly Instalment (EMI) starts after a borrower’s possession of a loan has been confirmed. Usually, the issuance of a disbursement cheque is the final stage of the loan application process. The exact time when EMI starts for a home loan depends on when the borrower chooses to make the first instalment payment of the home loan.

If the borrower pays the initial instalment on the 2nd of the month, and the loan cheque is received on the 16th, then the borrower should expect to pay on the 16th of the month. EMIs typically begin from the month after the month in which the home loan amount was disbursed in full. A home loan EMI calculator is a great way for borrowers to know the exact amount to be paid monthly.

In this article, learn all you need to know about when a home loan EMI starts.

The Beginning of a Home Loan EMI

The EMI includes a certain amount of interest that home loan borrowers pay every month for the duration of their respective loans. The EMI is often determined by the lender's home loan EMI calculator. 

Home Loan EMI Starts After Possession

When a home loan is taken for an uncompleted property, a pre-EMI is what's paid by the borrower. A pre-EMI is an interest the lender receives in place of the regular EMI payment and it’s usually within the range of 20% of the actual property value. EMI starts for a home loan when the property has been completed and after the borrower has taken possession of the house.

The scheme known as the “subvention scheme” is beneficial to the borrowers because some uncompleted properties require 2-3 years for completion. When the property has been taken possession of, it would be possessed at a low price rate and the property value would have skyrocketed.

Sometimes, based on an arrangement between the borrower and the financier, the borrower enjoys zero interest on the home loan amount. Also, the borrower can enjoy certain benefits on the property, such as a rise in value. 

When Does EMI Start After Disbursement?

Disbursement is when borrowers get the home loan amount they are eligible for. Before this happens, both parties must have reached a mutual agreement on the terms and conditions. Some financiers prefer that the home loan EMI starts after the documentation for the property and down-payment for the property have been actualized.

The EMI begins once the home loan has been discussed completely. To avoid paying higher EMIs, take the cheque on the same day that your financier signs it.

Note that a long home loan duration will produce a minor EMI burden. When your loan duration is short, then expect to pay more.

How to Prepare for When Home Loan EMI Starts

Good borrowers know that a shorter loan tenor is best for them. No matter what the loan amount, we recommend that you try to clear up the EMIs for the loan in a short time. One such way to reduce your property debt is a partial prepayment.

Understand that your home loan is likely to be a floating rate of interest, so your financier is unlikely to penalize you for making a partial prepayment.

We already mentioned that your home loan EMI comprises two parts which are the interest and the principal loan amount. Know that a low interest rate will make your loan repayments bearable.

A friendly reminder: more payments on the principal loan amount guarantees that your home loan will reduce. Partial prepayments can be actualized by utilizing holiday bonuses, arrear payments, and other financial privileges at work. 

Tips for the Prospective Home Loan Borrower

If you're considering a loan for a new house, then you might want to weigh both of your repayment options. The Pre-EMI and actual EMI payments are good, but we advise that you close your debt immediately to prevent repayments that will take many years to finish.

Remember, home loan EMI starts after possession. Take advantage of our home loan EMI calculator, and get the best option for you today.