SBI Moratorium question

[A Jain]

Hello,

I got my loan disbursed on June 1 and opted for 3 month moratorium. I
had set Sept 15, 2012 as first EMI payment date.

I was told that I will have to pay interest during the moratorium
period. What I do not understand is how the payments will be scheduled
during the moratorium period? Do I have to pay any money during this
period or the interest gets added on the total loan and my EMI
starting from Sept 15, 2012 will change?

If somebody has experience with moratorium period, can you please give
some insight on how the payment to the bank work?

Thanks in advance,
-Aarul

[Sandeep Kumar]

Hi Aarul,

As far as my understanding goes, you have to pay interest during these
3 months. The amount will not be added to your loan. I'll suggest not
to go for moratorium, because in start the major part of EMI is
interest and very small principal. And in any case you have to pay
interest in moratorium period, so why not pay the full EMI.

Rest the decision is yours based on your individual requirement.

Regards

[A Jain]

Hi Sandeep,

Thanks for your reply. Somehow, the situation is confusing. RACPC did
not ask me the account from which they will deduct interest and also
did not tell me the date of deduction. I contacted Shailendra and he
said he will send the calculations. Hope he comes back soon, but just
wanted to know if someone already has done this and knows the in and
out of loan with moratorium. .

I opted for moratorium so that instead of paying EMI to bank, I can
utilize max gain and keep the principal part in OD account. So if my
EMI would have been (p+i), where p is principal and i interest, I will
pay i during moratorium and keep p in maxgain. It will be same as
starting EMI rightaway. Gives me a little more flexibility just in
case of any emergency.
Also I heard during moratorium, interest is simple interest and not
daily compounding. Not sure about this though.

Regards
-Aarul

[surenca]

My friend got disbursement of Rs. 57 Lakh with a moratorium of six months.  Tenure of the loan is 25 years and rate of intt is 10.75%.  His EMI is around Rs. 55,100, in comparison to EMI of Rs. 54,839 in case where there is no moratorium.

Best...

[A Jain]

Thanks for your reply. But I do not understand that if we are paying
interest before commencement of EMI then, why would EMI be any
different. Unless interest during moratorium period is clubbed with
total loan amount EMI should not increase.

In your friend's case, interest for six months is about 3,00,000 and
EMI on (57lakh + 3lakh) for 25 years with 10.75% comes out to be about
57786 which is much more than what you wrote.

Can you please ask your friend, if he/she paid interest during
moratorium period and why the EMI was more? It would really help me as
everyone at SBI is busy disbursing loan for DDA and they tell to come
after 26th and so I just don't know who to contact.

Regards
-Aarul

[surenca]

I've rechecked the things with my friend and the EMI amount is Rs. 55,064.  However, the moratorium period is of three months only.  It was wrongly typed as six months in his sanctioned docs, but later SBI allowed only for three months only.  Final details of his loan

Amount of Loan - Rs. 57.00 Lakhs

ROI - 10.75%

Tenure - 25 years

Moratorium - 3 months

EMI - Rs. 55,064

Best...

[Anjan]

What is the procedure to apply for Moratorium?

It is a good option, if nothing have to pay during this period. So that we will accumulate some amount for max gain.

Thanks,

[A Jain]

Thanks for rechecking. I am very confused on how SBI is calculating
EMI. Let me put my loan position here.

I had taken a loan of 70.36 lakhs for 30 years. As per home loan
calculator (sent by Sandeep), EMI comes out to be 65679 but EMI
written in documents is 65755. I thought this difference is because
SBI loan is daily compounding instead of monthly compounding, but then
I used the calculator at:
http://www.pine-grove.com/online-calculators/loan-calculator.htm
which provides an option of daily compounding, it gives me an EMI of
65964.

Now, I wrote an email to RACPC asking for payment schedule and if I
have to pay anything during moratorium. This is what they said:

---
Dear Sir,
With reference to the e-mail dated 12/06/2012, we advise that interest
has to be paid every month even during moratorium period. The system
calculates interest on the last day of every month and hence, you
should pay it by the first week of next month. In your case, EMI for
interest is Rs. 69,579/-. Kindly fill the Standing Instruction mandate
(copy enclosed) duly signed by you. The system will deduct the EMI
automatically by debiting your SBI SB A/c.
---

Now I just do not understand, that how even after interest payment
during moratorium payment, EMI comes out to almost 4000 rs more. Even
if I assume that the EMI calculation added interest during moratorium
period to my loan amount, the emi as per calculator should be 67640.

I will probably visit RACPC/my loan branch after June 26 or maybe
Shailendra will update me with something. I hope everyone is checking
their own EMI calculation.

Regards
-Aarul

[surenca]

I've heard that some banks do not change the date of payment of last EMI, even if we choose moratorium.  That means the nos. of EMI would be 297, instead of original 300, if we choose three months moratorium.  Maybe this may help is getting actual calculations.

I'm not sure about above's correctness.  May be Sandeep can throw some light on this otherwise we will have to confirm this from SBI itself.

Best...

[A Jain]

Yes. thats correct. 3 months are included within 360 month period. so
the actual term would be 357 months. But still, EMI of 69k something
doesn't make sense. :(