How to Avoid Part Period Interest in SBI Home Loan?

Hey there, One of the major factors to consider while taking a loan is the interest rate applicable. Several banks have different schemes for loan interest rates and the repayment period. In my answer, I will share how to avoid part period interest in SBI Home loan. Take a look at my answer to know more.

  What is the meaning of Part Period interest in SBI home loan ?

 To explain simply, part period interest in SBI home loan is the interest charged by the bank between the time period from the day of disbursement of loan to the date when EMI starts.

   How to avoid part period interest in SBI Home loan ?

The following tips might help you avoid part period interest in Home loan by SBI. 

• SBI does not follow a monthly balance policy like other banks. 

• SBI practices daily balance policy. 

• Pay the principal amount quickly to reduce your loan in general. 

• Close your loan by paying the EMI amount on the same day of the month as when you availed the loan. 

• Take a look a Home loan prepayment and consider paying your bills before the tenure is over. 

 

I hope my answer about how to avoid part period interest in SBI Home loan helps you out.

Read more :

What is part period interest?    What is part period interest in SBI home loan?     

I have been using the SBI home loan facility for years and avoiding the part period interest. All you need to do is just pay the principal amount at a specific time. There are some more I want you to know. So let me take you through what part period inter in SBI means.

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What is part period interest in SBI home loans?

At a specified duration of time, interest is paid or received. Part period interest refers to a scenario in which one pays or receives interest at a time other than the specified time. It should be remembered that SBI has a daily balance policy, as compared to all other banks' monthly balance policies. This is the real meaning of part period inter in SBI home loan.

How to avoid part period interest in SBI home loan?

You need to confirm that the principal is repaid as soon as possible. The amount of interest to be repaid is proportional to the principal amount. You can pay more than the normal EMI if your finances allow. It will help you lower your outstanding principal and also help you save money on interest. And if you want to know more about how to avoid part period interest in SBI, go through Shrishti’s answer. All your queries will be answered.

Part period interest calculation:

The following mathematical formula can be used to determine your house loan EMI:

EMI Amount = [P x R x (1+R)^N] / [(1+R)^N-1]

In this formula, P, R and N are the variables. 

When you modify any of the three variables, the EMI value will vary.

Let's take a closer look at these factors.

The letter P stands for 'Principal Amount.' The main amount is the amount of the loan that you received from the bank and on which interest will be computed. The bank's interest rate is denoted by the letter R. N is the number of years the loan has been taken out for. Because EMIs are paid on a monthly basis, the length is computed in months.

So, if you acquire a home loan of Rs.60 lakh for a term of 20 years at a 12-percent average interest rate, your estimated EMI will be:

N = 20 years or 240 months, P = Rs.60 lakh, R = 12/100/12 or 0.01 (change to months)

EMI = [6000000 x 0.01 x (1+0.01)^240] / [(1+0.01)^240-1] 

The EMI is Rs.60,000

I hope you understood what part period inter in SBI means.

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I took a home loan from SBI a few months ago. I already had an SBI Savings account to which Loan Account was added. I just checked the loan account settlement and saw this part period interest SBI term. So, I asked my cousin about it as he has been also paying for his home loan since last year. He told me that part period interest is an interest charged by the State Bank of India for the days from the loan disbursement date to the date when EMI begins.  He shared an example with me for a better understanding. Avail NoBroker’s Home Loan Services in Case You Want to Go for Home Loan Balance Transfer!

SBI Part Period Interest Example

Let’s say you apply for a housing loan in the State Bank of India and all the formalities are done. The SBI disburses the loan on the 20th of the month but the EMI begins on the 6th of the next month. Now that the SBI has already disbursed the loan for use, it’ll charge part period interest for the days remaining between the home loan disbursement date, i.e. 20th of the previous month, and the date of EMI, i.e. 6th of the next month. The calculation of the part period interest will be based on the agreed-upon interest rates by the bank. This is how the SBI part period interest calculation is done. If you are not able to understand this, then I will explain it the way my friend Sanchu explained it to me. Forget the jargon "Part period Interest" for a moment. Let’s say you get a loan and now you need to pay interest for it at an agreed-upon interest rate. Now, at the end of every month, part period interest/interest will be debited to your account. To make sure you aren’t charged extra, compute interest normally i.e., Number of days x Interest Rates x Outstanding Balance at the last month’s end. I want you to know that SBI follows a 'Daily Balance Policy (as Shrishti has mentioned) in case any repayment is made during the month. Consult NoBroker’s Legal Experts if You Want to Draft a Home Loan Application! This is all about the part payment in home loan. Read more: What is part period interest in SBI Home Loan? What is part period interest? What is the lowest home loan interest rate in India? I hope now you know how the SBI part period interest calculation is done.  

I have recently availed a home loan from SBI. So, let me explain what part period in SBI is, and how to avoid part period interest. Making more principal payments on your mortgage in the middle of the month may lower the sum still owed, which may have an effect on how interest is calculated for the days left in that month. The portion of the month that the initial loan balance was unpaid before the payment was completed may be calculated by the lender and added to your account as "part period interest," which you would be charged.

How to avoid part period interest in SBI?

• Assure prompt repayment of the principal, and close your home loan. The amount of interest that must be repaid decreases in direct proportion to the decrease in principal (due to faster repayment).

Calculate your EMI on a home loan via the NoBroker EMI calculator

• If possible, pay more than the standard EMI. Your outstanding principal balance and your interest expense will both be decreased by the surplus amount.

I hope this will help you understand how to avoid part period interest.

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Read More:

What are the SBI Home Loan Prepayment Rules? How to Close SBI Home Loan Online? Which Bank is Best for Plot Loan?

I can help you with measures you can take to avoid the SBI home loan part period interest rate. There are multiple things that you can do here. This includes paying your principal amount as quickly as possible, taking a home loan repayment and many more. I wanted to save up on part period interest when I took a home loan last year. I figured out some ways that really helped me avoid the part period interest rate. So, let me share those in detail with you.  

How to avoid the Part Period Interest SBI Home Loan?

Here are some ways through which you can avoid the SBI home loan’s part period interest.

1. Make your EMI payments on the same date of every month on which your loan was disbursed. 

2. Make the payment for the principal loan amount as quickly as you can to reduce your overall loan.

3. You can opt for a home loan prepayment and make your payments before the tenure gets over.

So, these are three ways through which you can avoid the part period interest on your home loan. I hope this information helps you.

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