Planning a home loan? Know the difference between pre-EMI and full-EMI repayment plans

EMI, Home Loans, interests, home loan rates, home loan interest rates
Image Source : FREEPIK For home loans, what are the pre-EMI and full-EMI repayment plans? Knowing the differences and better options

The most common method used by people to buy a property is a home loan. House loans can be repaid over terms of up to 30 years by making equal monthly installments. However, selecting a lender with reasonable interest rates is crucial.

A homeowner can refinance the mortgage to take advantage of cheaper interest rates, smaller monthly payments, or to switch to a new sort of loan. Ultimately, a home loan can be a useful tool for helping people achieve their housing goals, manage their finances, or invest in real estate. The borrower should be aware of the EMI options that are available. Normally there are two types of EMI: Pre-EMI and Full EMI.

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Pre-EMI

The interest charged only on loans is known as pre-EMI. This amount is paid while the building or residence is being constructed. The pre-EMI amount is less than the total EMI amount since just the interest part of the EMI is paid out and the main loan amount is not affected. The pre-EMI period is not included in the loan tenure.

When should one select the Pre-EMI option?

When there is not enough money to cover both the rent and the loan payback EMI, one should select the Pre-EMI option. The owner may also decide whether they want to sell the property soon after construction or after a few years.

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Full EMI

The total EMI payment for a home loan comprises both the principal and interest installments. This payment will begin as soon as the house or building is finished being built. Some banks also approve the initiation of full EMI payments when the loan amount is being disbursed in installments.

What distinguishes full EMI from pre EMI options?








  Full EMI Pre EMI
Loan Disbursal The Full-EMI option is frequently used when the entire loan amount is disbursed at once. The Pre-EMI option is used when the loan amount is paid back in installments.
Interest rate calculation For the Full-EMI option, the interest is based on the principal loan amount For the Pre-EMI option, the interest is compounded based on the loan amount delivered to the builder.
Loan repayment time The debt is settled more rapidly. The payment will be made every month.
EMI payments Monthly payments for the Pre-EMI option began as soon as construction gets underway. The EMI payments for the Full-EMI option don’t start until the property is done and is in your possession.

FAQs

Q1, What are the two EMI types ?


EMI in advance and EMI in arrears

Q2 Can a loan be transferred to another banks?

Yes, a loan can be transferred to other banks.

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