I want to buy a house but there is this one thing about the bank loan I am not able to understand. Lets say I am taking loan of 60L rs. and I start an EMI of X amount. The state bank of India (all banks are the same) is deducting only interest for 3 years. So after 3 years my loan amount is same even after paying EMI.

Can someone help understand why is this? Is it just an RBI rule or something?

I am finding buying a home a very costly affair as we might end up paying EMI for almost my whole life. Is it worth it or will I be regretting this?. I don't have house that's why I am thinking of buying one but as a salaried person it feels very uncomfortable to spend so much.

  • You are okay with paying rent the whole life, but not EMI? Anyway, why do you need to pay EMI your whole life, you can always go for prepayment and early closure of your loan, like I did.
    – Masked Man
    Sep 5, 2016 at 14:18

1 Answer 1


Can someone help understand why is this? or is it just RBI rule or something?

There is no RBI Rule. If your house is under construction, Banks give the option of Interest Only EMI [Also called Pre-EMI]. If you are paying normal EMI, then principal also reduces, although in the initial years the reduction in principal is very less.

I am finding buying a home a very costly affair as we might end paying EMI almost whole life.

This is opinion based. There is no right or wrong answer.

  • Thanks for reply Dheer, I want to buys 8yr old constructed property but when I inquired with bank they told the procedure and everything is same.
    – sandip
    Aug 26, 2016 at 6:12
  • @sandip Did the Bank tell you no principle is deducted for 3 years or you arrived at this on your own?
    – Dheer
    Aug 26, 2016 at 6:23

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