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I would like to take home loan for under-construction building in India. Completion time will be 30Months. How do I calculate pre-emi, if I take the home-loan of Rs.60L for 15 Years with an interest of 10.5%.

Disbursement will be after every 4 month. (Rough calculation will be like this)

Month  Disbursed_Amount  Total_Disbursed_Amount
1      Rs. 9L            Rs. 9L
2      Rs. 9L            Rs. 18L
3      Rs. 9L            Rs. 27L
4      Rs. 9L            Rs. 36L
5      Rs. 9L            Rs. 45L
6      Rs. 9L            Rs. 54L
7      Rs. 6L            Rs. 60L

After 30 Month, full amount will get disbursed to builder by bank. Once I got the possession, I will start the EMI to bank.

But in this meantime, how do I calculate the Pre-EMI for these 30 Month ?

I will be pleased, if someone provide the formula for pre-emi calculation for above given data

  • I don't know how things work in India but for a view of how they work in the US (or in one state in the US), see this answer. If the same workings apply, your monthly payment during the construction period will be interest only on the amount owed, and will change every 4 months as more money is disbursed. So, the formula for the monthly payment (made at the end of each month) will be P*(0.105/12) where P is the amount disbursed as of the beginning of the month. (This assumes that no disbursements occur in the middle of the month.) – Dilip Sarwate Jul 20 '15 at 13:38
  • @DilipSarwate, In India, AFAIK, during pre-emi, principal amount is also get added to interest. So, I think, formula must be different – SHW Jul 20 '15 at 14:03
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Generally the Pre-EMI are interest only and hence it would change after every disbursements.

Its Balance*(Rate of Interest/12)

So after first disbursement, it would Rs 7875/- After next disbursement, it would double.

Edit:
If you are going in for FULL EMI before possession, it would be simple to calculate using Excel as =PMT(Rate/12, Years*12,-Principal). Using this your EMI would be 9948.59. Whenever further disbursements are made, use the same formula to arrive at the new EMI

  • I thought so too and said so in my comment, but the OP declines to accept this view. – Dilip Sarwate Jul 20 '15 at 18:21
  • @DilipSarwate, I am not declining what you said. I was just having another query about your answer. Anyway, thanks. – SHW Jul 21 '15 at 6:27
  • One thing to keep in mind: If the initial loan amount is 9L and 4 EMI payments have been made when the next 9L is paid to the builder, the Principal owed at that time is not 18L but rather 18L minus whatever small part of the original 9L that has been repaid via the 4 EMI payments. Similarly, the Years should be reduced by 1/3 year unless the loan agreement calls for the 15-year period to begin when the full 60L has been disbursed (and what is owed is slightly less because some of that 60L has been paid back via the full EMI payments). – Dilip Sarwate Jul 21 '15 at 17:00

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