RBI 3 Month EMI Moratorium: If you have the money, pay up.

RBI 3 Month EMI Moratorium: If you have the money, pay up.

RBI announced to all financial institution to extend the customer Load EMI repayment for 3 month ,Moratorium start from March-2020 to May-2020 only

RBI's 3 EMI Moratorium means simply says it is not exactly relief for you also its increase Burden. 

Consider this example,

You have  taken a  home loan of  Rs. 50 lakh at 8.5% interest for 10 years.

Monthly  EMI is Rs. 62,000 (approximately).

Duration : March-2020 to March-2030

First Emi start from  March-2020 emi amount  Rs 62000 /-    (FYI--"Monthly EMI payment will have (principle amount + interest amount)")

Here EMI includes (28000(principle amount) + 35000 (intrest amount)) = Rs 62000 /-   (approximately)

Now you have to pay the first installment EMI  in March month , but instead of paying EMI you have choosen  3 EMI moratorium.

This means you are not paying the EMI (March to May) , 

Now At end of the March month you loan amount is (principle amount 50 lakh plus intreset for the March month  "8.5%/12 = Rs. 35,000") = 5035000.  (3EMI Moratorium is only for principle amount not for the interest amount,Interest amount will be added to total principle amount).

if we  don’t pay in april month. Interest applies on the FULL amount of  50.35 lakh  now, so it’s a little closer to Rs. 36,000 in April.  The total outstanding becomes Rs. 5071000. 

 After three months, your new principal is Rs. 51.07 lakh. Effectively you’ll have about Rs. 1 lakh in extra interest to be paid to the bank.

The loan extends three more months at the end, (120 month extends to 123 month)

But this Rs. 1.07 lakh extra is additional so decide to increase the EMI, or something else.

Thanks