Financial Calculators
EMI Moratorium Cost Calculator
A holiday from EMIs is not a holiday from interest. Here is the bill.
Interest added during the holiday
₹1,37,557
outstanding grows to ₹31,37,557
- Current EMI
- ₹38,003
- Same EMI: tenure becomes
- 10 years 10 months (+10)
- Same EMI: total extra interest
- ₹3,80,027
- Same tenure: new EMI
- ₹39,745
- Same tenure: total extra interest
- ₹2,09,101
A moratorium defers EMIs; it does not waive interest. The unpaid interest is added to the loan and earns interest itself. Use one only for a genuine cash crisis, and if you do, restart with a higher EMI rather than a longer tenure.
These figures are for illustrative purposes only and are not investment advice. Please consult your investment adviser for investment related advice.
Deferred, not forgiven
During a moratorium no EMI is paid, but interest continues to accrue on the outstanding balance and is added to it. When repayments resume, the loan is larger than before and the extra interest itself earns interest. A six-month holiday on a ten-year loan can add most of a year to it.
The calculator shows the interest added, then the two ways to absorb it: a longer tenure at the same EMI, or a higher EMI over the same tenure, with the total extra cost of each.
Capitalise the interest, then resume
Grown balance = outstanding x (1 + i)^holiday months\nSame EMI: new n = -ln(1 - grown x i / EMI) / ln(1 + i)\nSame tenure: new EMI on the grown balance over the old nWorked example: on Rs 30,00,000 at 9% with 120 months left (EMI Rs 38,003), a 6-month holiday adds Rs 1,37,557 of interest and the balance becomes Rs 31,37,557. Keeping the EMI stretches the loan to 130 months and costs Rs 3,80,027 extra; keeping the tenure raises the EMI to Rs 39,745 and costs Rs 2,09,101 extra.
Frequently asked questions
When is a moratorium worth taking?
Only in a genuine cash crisis, when the alternative is a default or a credit card. The cost is real but a missed EMI on record costs more. If you can pay even the interest during the holiday, do.
Does a moratorium hurt my credit score?
A moratorium granted by the lender is not reported as a default. A missed EMI without one is.
Why does keeping the EMI cost more than keeping the tenure?
Because it stretches the loan, and every extra month is interest on a balance that shrinks more slowly. Raising the EMI removes the added interest quickly.
Is this the same as an education loan moratorium?
In principle, yes: interest accrues during the study period. The Education Loan calculator handles that case with simple interest, which is how most banks treat the moratorium period.
An emergency fund is the cheaper moratorium.
We help clients hold six months of EMIs in a liquid fund so a rough patch never becomes a longer loan.