When Does Home Loan EMI Start?

When an individual takes a home loan, there are certain questions that encounter and the primary one is – When does home loan EMI starts? To understand the concept of Equated Monthly Installment and when it will start is a crucial aspect of your home loan journey and financial planning. In simpler terms, when your home loan EMI will begin completely depends upon the loan disbursement process.

In this blog, we will understand when you home loan EMI starts, how disbursement of  loan amount relates with EMI commencement, Pre-EMI, and documents required for loan approval and disbursement.

Loan Disbursement EMI Start

The start of your home loan EMI is much related to your home loan disbursement. Below-mentioned are the key factors that affects the start of your EMI:

1. Full Disbursement:

   • Meaning: The financial institution disburses the complete loan amount to the seller or builder in one go.

   • EMI Commencement: Usually, your EMI starts in the month following the full disbursement of your loan amount. For example, if the loan is fully disbursed in May, your EMI payments would start in June.

2. Progressive Disbursement:

   • Meaning: In cases of under-construction properties, the loan amount is disbursed in stages based on the construction milestones.

   • EMI Commencement: The full EMI payments that include both interest and principal start once the complete loan amount has been disbursed. However, during the period of partial disbursement, you may be required to pay interest on the disbursed loan amount, known as pre-EMI.

Understanding Pre-EMI

Pre-EMI is typically the interest payment made on the partially disbursed loan amount before the full disbursement occurs. Pre-EMIs are particularly relevant for the loans taken for under-construction properties.

• Example: If you have taken a home loan of ₹40,00,000 and only ₹10,00,000 has been disbursed initially, you will pay pre-EMI on the ₹10,00,000 until the remaining loan amount is disbursed.

Important Documentation for Loan Approval and Disbursement

Whenever you take a home loan, there is a need of certain important documentation to ensure a smooth and seamless loan approval and disbursement process. Following are the key documents that are typically required in general:

• Identity Proof: Identity proof includes documents like PAN card, Aadhaar card, passport, and voter ID.

• Proof of Income: Income proof comprises of salary slips, income tax returns, bank statements.

• Address Proof: For address proof, there are required documents such as utility bills, passport, rental agreement, and voter ID.

• Proof of Employment: Employment proof includes documents like employment verification letter and offer letter.

• Property Documents: The documents of property comprises sale agreement, NOC from the builder, and property title deeds.

Conclusion

Knowing when your home loan EMI starts helps you plan your finances better. Whether it's after full disbursement or during the progressive disbursement phase with pre-EMI, being aware of these details ensures you are prepared for your financial commitments.

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