When buying an under-construction home, lenders disburse funds in tranches linked to construction milestones, creating two distinct repayment options.

1. Pre-EMI (Simple Interest Only)

You pay only the interest component on the actual disbursed amount until project completion. While your monthly outgo is low during construction, none of this payment reduces your principal balance.

2. Full EMI (Tranche-Based Amortization)

You begin paying full EMIs immediately. The bank computes interest on the disbursed portion, and the surplus payment directly pays down the principal balance, reducing your effective tenure before possession.

Which Should You Choose?

If you are currently paying rent, Pre-EMI prevents double cash-flow strain. If you have surplus cash, opt for Full EMI to save substantial compound interest.