How is tranche based EMI different from pre EMI or are they the same?
The big difference between tranche based EMIs and pre EMIs is the fact that any amount you pay over the interest goes towards principal repayment. Under a tranche based EMI option you can start repayment of the home loan right from the time of the first disbursal by the bank. So if you take a home loan under trance based EMI scheme, you start repayment towards both
principal and interest component of your home loan right from the time of the first disbursal by the bank.
Tranche EMI is a special facility offered by few banks where your EMI will start immediately after the first disbursal of the loan to the builder. This is for under-construction properties. You are allowed to fix the instalments until the property is ready and the total loan is disbursed. Usually, the minimum EMI amount will be the interest on the amount disbursed. If you want to repay more, the excess amount will go towards your principal repayment. Under Pre-EMI, you will pay back only the interest. There is no principal repayment until the total loan is disbursed. That’s why most lenders do not offer tranche EMI as Pre-EMI is more beneficial to them.