CoolDude

Pre-EMI is killing. Its costs you so much extra. I just wanted to know if there is any product available in the market wherein my my emi's will start right after I take the 1st partial disbursement ?

sakelkar

Good point CooDude. Somehow I missed this. Last time I did some search HDFC did seem to have an option to go for tranche based EMI, as soon first disbursal is made.

But I am NOT sure about the PSU banks. Will need to check this now. As you say pre-EMI is NOT good at all.

CoolDude

I checked with PSU banks over the w/e - SBI and BOB, both of them offer the option of start the EMI immediately .. so good news. But keep in mind you get tax benefits only after your home construction is complete or is going to get completed in the same financial year.

Regards.

abhi77777

Why is pre - EMI not good?

Do the math - check this

]http://www.rediff.com/getahead/2006/jul/03loan.htm[/url]

kallol

I guess it is a strong function of the number of years of loan & the difference in price between DP & CLP.
Thanks for the link abhi.

chess8

Thanks all. I was also thinking the same. I stepped outh of idbi due to their policy of pre emi, which was making me look like a fool. They said i have no option but to pay pre emi if idbi was to finance my flat... I have politely told them 2 get lost.. Canara, hdfc are all giving option to start emi immidiately. Y will one make a loan of 20 years into a life time loan with pre emi... Lolz

hagarwal

I'm confused about one thing.

EMI = Pre-EMI (i.e Interest part) + Principal Amount.

So if i'm paying pre-emi and simultaneously paying a small principal prepayment, won't the two things be equal?

And if i'm paying my principal, obviously my emi or my tenure will decrease.

Why should i worry about pre-emi then?

nitesh321

Pre-EMI is the interest on the partial disbursals till the final disbursement is made. Once the final disbursement is made by the HFC to the builder, your EMI starts.
So, for first two years (construction period), you would be paying only interest and not repaying any principal; thereafter, you would be paying your EMI for the tenure.
So you are paying interest for two years plus EMI for 240 months.

Moreover if you are staying on rent before getting the possession of your new property, you will have double burden of Rent + pre-EMI (Not actual EMI)

hagarwal

Agreed: but even in that period, a person can pay an amount equal to principle (in regular intervals), equal to that deducted as a part of emi for that tenor.

And that would help to reduce your end loan amount, ultimately reducing your loan or your tenor.

What my point is with pre-emi you can simulate your emi, but other wise is not possible.

Now this is investor's choice weather he wants to pay up principle to simulate pre-emi as emi or he wants to invest that amount on better returns to earn an interest more then he have to pay to bank.

This is definitely a point to consider as a parameter to choose between emi and pre-emi. If a person is living in a low rental house and getting good returns from his invested principle amount, than he can go for pre-emi else emi.

dobhal.bipul

Those who dont want to pay PRE-EMI, you can opt the downment option. Using this option, the rate of property will be low and the EMI will start before.

But overall the pre-EMI option is much better in all circumstances specially for salaried people. The pre-EMI is calculated only for the disbussed amount with simple interest.