EMI stands for equated monthly instalment and have to be paid by a borrower to repay his loan that he has borrowed from a bank or a financial institution. You can repay your loan amount by following two methods of Pre EMI and Full-Emi. Let us look at each option in detail and study the merits/demerits associated with each option –
- Pre Emi – Pre emi is the interest component of the loan amount disbursed that you pay until full disbursal is done. For a under construction home, you will pay interest component of your loan until construction is complete. Your emi payments will start only after pre emi phase. It is advantageous for the consumers as with time their disposable income would increase and they can start their full emi at the optimal time. You can easily calculate your pre emi easily online with the help of an emi calculator
- Full emi – You also have an option to pay full emi even when the disbursal is done in stages. In this method, you will start paying your full emi from the start of construction phase itself.
Paying full emi is always beneficial except in the following cases-
- If you can invest money in different financial assets to earn greater returns on them as you pay less principal in initial stages.
- You are looking to sell the property immediately after construction phase is
complete. - You are expecting a salary raise after some time in the near future.
- You are renting during construction phase and cannot afford to pay both rent and full emi at the same time.
At the end of the day, it is upto investor to decided between full emi and pre emi. There are plenty of online emi calculator which can easily calculate your monthly cash outgo for each month during loan repayment. You should always utilize these online emi calculators to arrive at a decision best suited for your condition.
