Pre-EMI and Full EMI are two home loan repayment types that are available for home loan borrowers. Here are the key differences between these two EMI formats:

 

Pre EMI

Full EMI

Ideal for

Those who want to delay the EMI payment to benefit from opportunity cost of capital.

Those who want to take faster possession of property.

Borrowers can

Sell the property post construction without bearing the EMI burden.

Those who face risk of construction delays and wish to avoid higher cost of capital.

Tax benefits

No tax deduction during construction phase. 

Post construction, interest component of EMI can be claimed for tax deduction.

No tax deduction during construction phase. 

Post construction, interest component of EMI can be claimed for tax deduction.

Loan disbursal

Disbursed in parts

Full disbursal at once

Repayment tenure

Slower debt repayment

Faster debt repayment

Start of EMI

Start of property construction

Post construction and possession of property

Property resale

Immediately post property construction 

Not possible to sell property until the timeline defined by the bank

Financial impact

Easier on pocket since only interest has to be paid during pre-construction.

May cause financial strain since both principal and interest components have to be paid from the start.

 

Recommended read - What Happens If I Miss An Emi Payment On My Loan

To conclude, EMI is the most important aspect of home loans. Therefore, a home loan borrower must understand the concepts of pre and full EMI in detail while knowing the key differences between the two. Doing so will help a home loan borrower make an informed decision at the time of loan application and ensure a smooth repayment process.