When Does Home Loan EMI Starts - Home Loan EMI Schedule

03 APRIL, 2024

Taking a home loan is a significant financial commitment, and one question certainly follows–when does EMI start for home loan? Many home buyers are caught off guard when they come to know the answer to this question. Thus, understanding the timeline of the EMIs is very important. It helps you manage your finances without straining your monthly budget. So, whether you are buying a ready property or opting for an under-construction one, confirm the home loan EMI date with your lender.

An Example Will Make Things Easy

Rahul received loan approval for his dream home, and being excited, he started planning his budget to keep his finances in check. However, he realised that he didn’t know exactly when the EMIs would start. He was confused about whether they would begin immediately or after loan disbursement. If Rahul knew the home loan EMI start date, he could easily plan his monthly expenses to avoid repayment defaults.

Insider Fact for Borrowers

Kotak Mahindra Bank allows flexibility regarding your EMI date. It allows you to select a monthly payment date that aligns with your financial cycle.

What Determines Your Home Loan EMI: Key Factors

Before you understand when does EMI start for home loan, know which factors determine it in the first place:

Home Loan Amount

Your home loan EMI is directly linked to your loan amount. A high credit amount leads to high monthly instalments. Thus, you must opt for a loan considering your repayment ability for better financial stability.

Interest Rate

The interest rate directly impacts the cost of your home loan. A high interest rate will attract a large monthly EMI. The interest rate is computed based on your credit score and lender policies.

Loan Duration and Down Payment

Your loan duration also influences your monthly EMI. So, when you take a long-duration home loan, it reduces your monthly repayments but increases the interest cost. Similarly, when you make a high down payment, it reduces the owed principal amount and reduces your EMI.

Understanding When Does EMI Start for Home Loan

The start of the home loan EMI is a significant event as it marks the date on which you start paying off the loan. Here is how it is determined:

Full Loan Disbursement

When your lender shells out the entire loan amount, that means they have provided you access to all the loan funds. The lender can disburse this amount directly to you or the property seller. Thus, your first home loan EMI date is directly linked to this disbursement.

For example, if there is a complete disbursement of the home loan amount in May, the EMI will generally begin in the next month, i.e., June. With Kotak Mahindra Bank, a specific monthly date will be set after considering your repayment tenure and preference.

Progressive or Partial Disbursement

Partial loan amount disbursement is usually done for under-construction properties. This means that the lenders release loan amounts in alignment with the construction stages, such as laying the foundation, setting up the structure, etc. In such a situation, it becomes crucial to know when does EMI start for home loan.

Usually, the monthly repayments will start only after the disbursement of the complete loan amount, i.e., after the construction is completed. However, the borrowers will pay the interest portion on the amount disbursed–it’s known as pre-EMI payment.

Take a moment to understand pre-payment EMI with an example:

Suppose you have taken a home loan of ₹50 lakh, and the property is under construction. The lender released ₹10 lakh for laying the foundation. You will have to pay the interest portion, i.e. the pre-EMI amount calculated at ₹10 lakh. Similarly, interest will be continuously computed on all the loan amounts released in stages.

Summing Up

Understanding when does EMI start for home loan is extremely crucial as it helps you manage your monthly budget strategically. With clear insights on repayment timelines, you can prepare well for your financial responsibilities, avoiding making any defaults. It keeps you safe from unnecessary late fees and penalties.

The best part is that with Kotak Mahindra Bank, customers have the flexibility to even update their set EMI date! All you have to do is contact our customer service department and provide the required details. Our executives will guide you through the EMI date updation process.