Moratorium
A temporary pause in loan EMI payments, during which interest continues to accrue.
Apply for a LoanWhat is Moratorium?
A moratorium period (also called EMI holiday or repayment holiday) is a period at the beginning of a loan where the borrower is not required to pay full EMIs. It is commonly offered on construction loans during the construction phase — borrowers pay only the interest on disbursed amounts (called Pre-EMI) until construction is complete. Interest continues to accrue during moratorium and is either charged monthly or added to the outstanding principal.
Example
Construction loan of ₹30 Lakh disbursed in stages. During 18-month construction, you pay Pre-EMI only on the disbursed amount: month 1 (₹5L disbursed) = ₹3,542 interest/month. After ₹30L fully disbursed: full EMI of ₹26,036/month begins.
Frequently Asked Questions
Is moratorium period the same as grace period?
They are different: moratorium is a planned pause in full EMI payments (often at loan start, during construction); grace period is extra time given after an EMI due date before late charges apply (usually 3–7 days after due date). Construction loans offer a 12–36 month moratorium by design. During COVID-19 (2020), RBI allowed a special 6-month moratorium where interest accrued and was added to principal.
Should I take the moratorium or pay full EMI from day one?
Paying full EMI from day one (if you can afford it) is financially better — you reduce the principal faster and pay less total interest. The moratorium is a cash flow convenience, not a financial benefit. If your construction loan is ₹30 Lakh and you can pay ₹26,000 EMI from month 1, do so — you save lakhs in accrued interest compared to paying Pre-EMI for 18 months first.
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