Purchasing a house requires a lot of financial effort on the buyer’s part. There are many things that a purchaser needs to know while buying a house because they involve money and a lot of finance-related matters. When people purchase a building that is under construction, the term ‘Pre EMI for home loans’ gets used a lot.

What is Pre EMI?

Pre EMI is defined as the interest payable on the amount of your housing loan sanctioned by the bank prior to taking possession of your house.

In the case of an under-construction property, banks normally sanction the loan in phases as per the development of the property. Prior to disbursement of the total loan amount, interest is paid on the amount disbursed to date. This is termed ‘Pre-EMI ‘.

Let us consider your sanctioned loan amount for a property is ₹50 lakhs, but to date the bank has released ₹10 lakhs to the developer. Interest would be charged only on ₹10 lakhs and not ₹50 lakhs to date.

The Royal Ganges offers properties which have the Ganga frontage. They come in the form of 2 to 3 BHK apartments as well as duplexes and bungalows. Pre-EMI knowledge is thus relevant to planning your purchase of the under-construction property.

How to Calculate Pre EMI for Home Loans?

Pre-EMI calculation is quite straightforward. All you need to know is the following:

• Amount of the loan disbursed
• Annual interest rate
• Duration in days or months for which the interest needs to be calculated

Calculation of Pre EMI each month is done as follows:

Pre EMI = Loan Amount Disbursed × Annual Interest Rate ÷ 12

If the disbursed loan amount is ₹10 lakh and your annual interest rate is 8%, then the monthly Pre EMI would be

₹10,00,000 × 8% ÷ 12 = ₹6,667 (approx.)

As the bank disburses more and more funds during construction, the Pre EMI may go up because you have to pay interest on the extra amount as well.

Nevertheless, the actual calculation may differ based on your bank’s policies. Please ensure that you review the repayment schedule offered by your bank.

Pre EMI vs. Regular EMI: What is the Difference?

However, there is a big distinction in terms of what your payments include. Usually, pre-EMI will just cover the interest part of your disbursal. Once the entire disbursal has been made by the bank and the repayments have started, then EMI will consist of both principal and interest payments.

Such distinction becomes important when you plan your budget. In case you are considering the Calcutta riverside villaments price, then you should take into account the amount of your loan as well as your Pre-EMI.

Why Should Homebuyers Understand Pre EMI?

Knowledge about Pre EMI will help you calculate your financial commitment throughout the period of construction. With knowledge of Pre EMI, you will be able to maintain enough cash instead of making the first payment on your loan as your total monthly instalment for a home loan.

With The Royal Ganges, our project includes a track of 1 km with access to the Ganges, along with the River Club, which is 70,000 sq. ft., a dedicated jetty, and a fast ferry. Our development also has an in-house shuttle facility to Taratala Metro and Bata More.

While buying a home, it is suggested that buyers should take into account not only the cost of their home but also the whole financial package, including the amount of the loan, down payment, Pre-EMI, and EMIs.

FAQs

1. Is Pre EMI mandatory for all home loans?

Depends on the loan structure and repayment terms of the lender. For under-construction property, lenders may provide Pre EMI for the construction period.

2. Is Pre EMI reducing the principal loan amount?

No. Pre EMI usually involves only the interest on the amount that has been disbursed. Repayment of principal will begin with the EMI.

3. Can I opt for full EMI and not Pre EMI?

Lenders may give this option to borrowers for paying the full EMI ahead of schedule. It is at the discretion of the lender and loan terms.

4. What should be considered while opting for a home loan?

Interest rates, processing fees, repayment tenure, the disbursal process, pre-EMI, and other fees should be considered before finalising the loan.

Purchasing a house that is under construction means that one needs to be excited and well-planned. Pre-EMI for home loans is very important during this process, as it will show what one needs to pay during the construction period of the property.

Whether it’s about the riverside apartment complex or even Calcutta riverside villaments prices, it would be helpful if one knew something about Pre EMI. It is our belief at The Royal Ganges that when one decides to purchase a house, they also decide to understand the process that comes along with it.