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What is Pre-EMI Interest?

If you decide to purchase a property that is under construction you can request your lender to link the disbursal of the loan amount to the stages of the property construction by opting for a pre-EMI payment. EMI, as we have discussed earlier consists of the principal and the interest component. The pre -EMI is the interest component that you pay monthly on the amount availed till the construction is complete and you get possession of the property.

Though a pre-EMI may seem cheaper at first, it results in more number of payments as the borrower ends up paying interest till such time as the property is under construction as well as after the full disbursement of the loan amount.

In case there is a delay in the project construction, the borrower may end up burning a hole in his pocket as he ends up paying more than the principal amount of the loan, even before getting the possession of his property. However, if you are an investor, willing to sell the property soon after you are granted possession, taking a pre-EMI option makes sense for you.