Representational photo.
MUMBAI: It is not just three equated monthly instalments (EMIs) that will get added to your home loan repayments if you choose to go in for a moratorium. Asking borrowers to defer EMIs only if they have no cash, banks have said that interest for the three months would get compounded if not repaid at the end of the period. This could lead to the borrowers paying for several months more depending on the length of their loans and whether they pre-pay.
In an illustration of how the moratorium would work, State Bank of India said that for a loan of Rs 30 lakh with a remaining maturity of 15 years, the net additional interest would be approximately Rs 2.34 lakh—equal to 8 EMIs. For a loan of Rs 6 lakh with a remaining maturity of 54 months, the additional interest payable would be around Rs 19,000, equal to an additional 1.5 EMIs. This is assuming there is no pre-payment or change in the interest rate. SBI also said