HomeFirst's video: RBI EMI Moratorium Option Moratorium extension

How does a home loan moratorium work? The Central Government in coordination with State Governments has imposed a lockdown across the country in order to contain the spread of the Covid-19 virus. This has impacted the livelihoods of our customers across various segments. RBI, in its notification dated 27th March 2020 (Ref: RBI/2019-20/186), has permitted Housing Finance Companies to offer a “moratorium of 3 months on payment of all installments falling due between Mar 1, 2020, and May 31, 2020”. In the above context, we are offering the following COVID Moratorium Program to our customers. The key terms of this program are as follows: All salaried and self-employed individual and non-individual borrowers (including proprietorships, partnership firms, and private limited companies) across all products having outstanding loans as of 1st Mar 2020 will be eligible for the moratorium program A moratorium is available on payment of installments falling due between 1st Mar 2020 and 31st May 2020. If payment was due prior to 1st March 2020, the moratorium is not available on them. [Note: The past due days on payments that were overdue on 1st March 2020 will continue to move up.] The customer has to provide his/her consent for the moratorium and related repayment plan. Customers who have requested the moratorium but want to clear their EMIs for April/May can do so by sending a request to cancel their moratorium application. Customers who have cleared their March and April EMIs can opt for the moratorium for May EMI. Mechanics of the program and impact on the customer: [For purpose of discussion, we will refer to a sample customer transaction: Loan Amount: Rs. 10 Lakhs ROI: 13.50% EMI: Rs. 12,074 Original loan tenure: 240 months Balance loan tenure: 200 months (starting from April 2020 and ending in Nov 2036) The customer has already cleared his 4th March EMI] The above customer will pay an EMI of Rs 12,074 on 4th April and 4th May in the normal course. This EMIs consist of an interest component of Rs 10,784 and Rs 10,770 and a principal component of Rs 1,291 and Rs 1,305 respectively. However, we propose to offer a COVID19 Moratorium Program Under this program, the customer will not pay any EMI/Interest in April and May. The customer will resume paying his monthly EMI from 4th June 2020. This will have respective break up of interest and principal. (Principal repayment will continue from June 2020) Since we have not recovered any principal from the customer in April and May, this will result in pushing out the maturity of the loan by 2 months. The customer’s balance tenure of 200 months will now start from June 2020 and end in Jan 2037. This still leaves us with the interest for Apr and May to be recovered. This amount (Rs 10,784 + Rs 10,770) is equal to Rs 21,554. At Home First, we propose to give customers 2 options to pay this back. Rs 21,554 to be paid back in 6 equal installments along with interest on this amount at the same rate of interest as the parent loan (Additional amount of Rs 3,798 in addition to regular EMI of Rs 12,074 starting from June 2020). Repayment of the additional amount will also start from 4th June 2020 Rs 21,554 to be paid back in 12 equal installments along with interest on this amount at the same rate of interest as the parent loan (Additional amount of Rs 1,963 in addition to regular EMI of Rs 12,074 starting from June 2020). Repayment of the additional amount will also start from 4th June 2020 In the above example, if the customer has not paid the EMI for 4th March 2020 and wants to opt for postponement of all 3 EMIs (Mar, Apr, and May), then the interest component of 4th March EMI also will get added to the total interest recoverable in 6/12 months.