Get the Tata Capital App to apply for Loans & manage your account. Download Now

Blogs

SUPPORT

Menu  
 
Apply Now
Apply Now

Tata Capital > Blog > Loan for Home > What is the Meaning of Moratorium Period in Home Loan?

Loan for Home

What is the Meaning of Moratorium Period in Home Loan?

What is the Meaning of Moratorium Period in Home Loan?

When you are taking out a home loan, a moratorium period is a facility that you can access. Here is everything you need to know about the moratorium period meaning in home loans.

What is the Meaning of Moratorium Period?

What is moratorium period? ‘Moratorium’ means “a state of temporary inactivity”. A moratorium period meaning is a duration usually at the beginning of your EMI repayment schedule where you don’t have to pay your monthly instalments. In essence, it is an EMI holiday period. Lending institutions usually offer this to customers availing student or home loans. For example, students are offered a one-year-long moratorium, at the beginning of their EMI repayment schedule as there may be a time gap between the completions of their course and finding employment.

Moratorium Period and Home Loans

Often, there are delays in the delivery of housing projects. In such a scenario, house buyers are forced to cope with the double burden of meeting the expenses of their present accommodation (rent) as well as with the responsibility of paying their EMIs. A moratorium is offered to home buyers to relieve them of this double burden. Additionally, they can use the home loan moratorium to plan their finances and prepare for the upcoming additional monthly expense (EMI).

Also, read – Loan for Buying Plot? Here’s All You Need to Know!

Moratorium Period vs Grace Period

It is easy to confuse this with a grace period. A grace period is usually an extended time given to the borrower to clear any dues. Moratorium, unlike a grace period, will accrue interest to your account and is usually offered to prevent any defaults and the possibility of the accumulation of dues.

How Does a Moratorium Period Affect Your EMI?

You can opt to pay the moratorium interest as it is charged, that is, during the period itself. In such a scenario, your EMI won’t be affected as you have already paid the interest. Another payment method which won’t have any impact on your EMI is by opting to pay the moratorium period- interest after the original EMI schedule. This way, your EMI would remain the same and only your tenure would increase.

Your EMI will be impacted if you don’t opt for the above-mentioned methods. The interest accrued, then, would be adjusted by increasing your EMI. In this case, you won’t have to pay anything during the holiday period.

It is recommended that you use the EMI moratorium calculator available on our website to assess the impact of the moratorium period on the EMI or the tenure.

You must, however, check with your lending institution and be thorough with the terms and conditions because some institutions might increase the interest rate after the holiday period to compensate for it. This usually happens with home loan sanctioned on floating interest rates.

Tata Capital has flexible terms and conditions when it comes to the moratorium period in home loan, so if you think you would plan your finances better then Tata Capital loans are the way to go! Want to learn more about the moratorium period in home loans? Download Tata Capital’s Home Loan app today!

Also, read: Loan moratorium period extended by 2 years: Govt

Types of Moratorium Period in Home Loans

You can apply for different home loan moratorium types. They work as a breathing room during your tough times.

Here are some moratorium period options that can make your repayments easy:

  • Emergency moratoriums: You can apply for an emergency moratorium during an economic crisis.
  • Structures moratoriums: These are for project loans that involve construction phases.
  • Seasonal Moratoriums: These are for seasonal businesses like agriculture.
  • Voluntary moratoriums: You can negotiate for a moratorium with your lenders during your temporary difficulties. You can also choose to pay only the interests in the moratorium period and skip the principal.

Also, read – What Is The Difference Between Home Equity Loan Vs Mortgage Loan?

Interest Accrual During Moratorium Period

When you pause your loan, you must understand how moratorium interest accrual impacts your repayments. Here’s what happens with home loan interest during moratorium and the interest calculation moratorium process:

  • Interest continues to accumulate on the outstanding principal during the moratorium.
  • The unpaid interest may be added to the principal, increasing your loan’s total cost.
  • You don’t pay EMIs during this period but expect higher EMIs later unless you extend your tenure.
  • Check with your lender for the exact interest calculation method and impact on your loan.

Also, read – 5 Ways How to Repay Home Loan Faster

Impact of Moratorium Period on Loan Tenure

The only moratorium impact on tenure is that it changes your repayment plan. We have put together effect of moratorium on home loan here:

  • Firstly, what is moratorium period in home loan? Moratorium period meaning is to pause EMIs but interest keeps adding to principal.
  • This increases the outstanding amount, often leading to loan tenure extension.
  • Lenders may stretch tenure by moratorium months or more to keep EMIs affordable.
  • Total interest rises due to a longer repayment period.
  • You can negotiate tenure extension or higher EMIs post-moratorium.

Also, read – Pros and Cons of Withdrawing from PF for Home Loan Down Payment

Eligibility and Application Process for Moratorium Period

You can apply moratorium home loan once you meet the moratorium eligibility criteria. 

Here’s a simple guide on the moratorium application process for home loans:

  • Typically, anyone with an active home loan can request a moratorium.
  • Eligibility may require a valid reason like job loss, health issues, or financial hardship.
  • Contact your lender early to confirm if you qualify for moratorium in banking benefits.
  • The moratorium in banking application process usually involves submitting a formal request and supporting documents.
  • Some lenders offer online forms for easy application.

Remember, moratorium in banking grants temporary relief but increases loan cost later.

Also, read – What Is Legal and Technical Verification in Home Loan Processing?

Pros and Cons of Availing Moratorium Period

Consider moratorium advantages disadvantages carefully before applying for the same. Here are some pros cons moratorium you can keep in mind:

  • Pros: Instant cash flow relief during emergencies. You can skip EMIs temporarily and buy time to stabilise finances in the moratorium period in India.
  • Cons: Interest keeps accruing, raising total loan cost. May extend tenure, delaying full repayment. Hurts credit score if misused often.

One of the benefits of moratorium period in India is that it eases pressure in job loss or medical crises. Keeps the loan active without any penalties.

Also, read – How to Claim Stamp Duty Exemption on Property

How to Use a Home Loan Moratorium Calculator

A moratorium calculator helps you plan smartly by showing the cost of pausing EMIs. Here’s how a home loan calculator moratorium works and helps you calculate moratorium impact.

  • Enter original loan amount, interest rate, and tenure details.
  • Input moratorium period in home loan months you want to take.
  • The calculator shows updated EMI, loan tenure, and total interest with moratorium.
  • Compare with your current repayment plan to see extra cost or extension.
  • Use this data to decide if moratorium suits your finances.
  • Try multiple scenarios to find the best moratorium period in India.

Apply For House Loan

Say Hello to Your New Home with Our Easy Home Loans!

Apply now
Popular Searches
PMAY Calculator Home Loan for Government Employee Home Loan for Self Employed Home Loan for Women Home Loan Balance Transfer with Top Up Area Calculator Stamp Duty Calculator Home Loan Top Up Approved Housing Projects in India 12 Lakh Home Loan 15 Lakh Home Loan 25 Lakh Home Loan 30 Lakh Home Loan 35 Lakh Home Loan 40 Lakh Home Loan 45 Lakh Home Loan 60 Lakh Home Loan 65 Lakh Home Loan 70 Lakh Home Loan 75 Lakh Home Loan 80 Lakh Home Loan 85 Lakh Home Loan 90 Lakh Home Loan 1.5 Crore Home Loan 2 Crore Home Loan 2.5 Crore Home Loan 3 Crore Home Loan 4 Crore Home Loan
More About Loans
home loan Home Extension Loan Affordable Housing Loan Pradhan Mantri Awas Yojana Home Construction Loan Home Loan Balance Transfer Documents Required for Home Loan Home Loan Interest Rates Home Loan EMI Calculator Home Loan Eligibility 10 Lakh Home Loan 50 Lakh Home Loan 30 Lakh Home Loan 40 Lakh Home Loan

FAQs

Does moratorium period increase loan tenure?

Moratorium defers EMIs but interest accrues on outstanding amounts. Lenders often extend tenure to adjust higher principal and keep EMIs affordable.

Can I prepay loan during moratorium?

Whether you can prepay loan during a moratorium or not, depends on your loan agreement and lender’s policies. Contact your lender to check if you can prepay the loan amount.

Is moratorium beneficial for all borrowers?

No. Moratorium period in India is only beneficial for the ones who are facing temporary hardships like job loss. Stable borrowers benefit more by paying EMIs regularly.

How to apply for a moratorium period on home loan?

You can apply online via your lender’s portal and navigate to the EMI moratorium section. Alternatively, you can directly approach customer care who’ll guide you through the application process for moratorium period in India.

What is the difference between moratorium period and EMI holiday?

What is moratorium period in home loan? Moratorium is a lender-granted deferral during a crisis. EMI holiday is a similar temporary pause, often the same term. Both accrue interest but no waiver.

Disclaimer

Most Viewed Blogs

Trending Blogs

Calculator

Personal Loan EMI Calculator

Personal Loan EMI Calculator
Home Loan EMI Calculator

Home Loan EMI Calculator
Business Loan EMI Calculator

Business Loan EMI Calculator
Used Car Loan EMI Calculator

Used Car Loan EMI Calculator
Two Wheeler Loan EMI Calculator

Two Wheeler Loan EMI Calculator
Loan Against Securities Calculator

Loan Against Securities Calculator
Loan Against Property Calculator

Loan Against Property Calculator
More Tools
Our Subsidiaries
Our Private Equity Funds

Useful Links and Resources

Policies, Codes & Other Documents

Tata Capital Solutions & Services

Uh oh, something went wrong

Please try again later.

Most Important Terms & Conditions - Home Loans

Download in your preferred language

Download