I want some accurate information from people who have good experience of this.

My understanding is that Tranche EMI is meant for Construction Linked
Plan (CLP) - when for some reason (i.e. dont trust builder) you are
wanting to go only for CLP.But on the basis of your salary, you can
afford the full EMI calculated for your entire loan. So your loan is
released as per CLP demand letters only, but you start your full EMI
from day 1. In the beginning, you pay back a big chunk of principal
disbursed and of course the full interest of the disbursed amount.

When your full amount is disbursed in 3 years time, you have already
paid back some of the principal. So your EMI is based on a total
principal sum which is less than full sum of CLP. For example, suppose
full CLP price is 30L. You go for tranche EMI, they release 3L every
2-4 months. You pay back EMI of -say- 30,000 PM (for ease of discussion) which includes the interest and part of principal. After 3 years, your outstanding amount will be only 21L principal - because you paid back30,000 x 36 = 10,80,000 including - say- 9L of principal and rest interest. So now your remaining 12 years (for 15 year loan) you pay 21000 per month.

Of course, bank makes the EMI amount same for before and after the
full disbursal by doing an accurate calculation, this was just for
illustration, but the idea is same - you balloon your principal repayment in the first 3 years. So if for a 30L loan the regular EMI is say 1000 per
Lakh per month, then with tranche EMI, it will become less, say 900
per lakh per month.

This is my current understanding, subject to correction by those who
have actually taken the loan.

Has anyone taken Tranche EMI? What is the actual EMI per Lakh?

My query was to compare tranche EMI with Downpayment (DP). Since builder will give discount for DP, amount of loan will become less - which
will also make the EMI less. Suppose there is 10% DP discount, 30L
flat is now for 27L. So obviously EMI will be less.

I was wondering about the difference in EMI between tranche EMI - which is on CLP which is safer in case of delays - and availing DP discount and
thereby reducing EMI.

Since both methods reduce the loan size, in which method will we pay more to the bank?

Just an academic question to understand the financial implications - also, if Tranche EMI on CLP works out same or better than DP, then why should we pay the full amount to the builder and reduce his incentive to complete the work on time?

Would appreciate input from those who have analysed these situations.

Read more
37 Replies
Sort by :Filter by :
  • It is better to pay EMI on the disbursed amount than EMI of whole sanctioned loan.

    If you can collect funds by doing so, u can pay the next installment to builder from your own funds. (I.e. you are not going to disburse the whole loan, I suppose there will be no problem to bank if one is taking less loan than the sanctioned initially)

    Why to take more loans & pay more EMI, Simply take fewer loans & pay less EMI
  • Yeah Deep, I was thinking on the same way because essentially I have to pay later installments to the builder from my pocket which only can be done by PEMI option.
  • Found this to be a very interesting discussion. I would like to add one more scenario. I am planning for a residential plot. Now with flats we all know even if the builder says 3 years as delivery time it is bound to >4 years( specially North India). However with the case of plots the only delay is in starting the work. Once started the it takes hardly take 6 months to put things in place. Now lets say DP cost is 33 lacs and CLP cost is 36 lacs. So even if we assume the worst case scenario of 3 years for possession of plot will it be advantageous to buy it in CLP?
  • Anybody can share or upload same excel ? I am not able to download.
  • Same problem faced here - not able to download the excel, can veterans please share once more? and in a non-password protected sheet if possible?
  • Originally Posted by legolas09
    Same problem faced here - not able to download the excel, can veterans please share once more? and in a non-password protected sheet if possible?

    You have to request for permissions from the google docs holder.
  • folks - i have taken a humble attempt at trying to build this out but not entirely sure I am doing this correctly. Can you guys please review once and let me know if I am missing something.

    Let me know if you face any issues in playing around with this - need your valuable inputs soon as I need to decide quickly for my home loan.