RBI moratorium on home loan EMIs

Hi everyone,

Just wanted to take this opportunity to ask a question to the broad investment community here regarding my situation.


  1. I have an outstanding home loan of 10 L rupees.
  2. I have an EMI of 1.06L rupees.
  3. Interest rate for the loan is 8.15%.

Given that RBI has given a moratorium on EMI payments, I am considering not paying the EMI for mar, june, may (even though I can) for the following reason:

if we think about how this decision affects cash flows, the following would end up happening:
An interest will accrue on this 10L rupees for next 3 months and i’ll have to pay interest on that interest June onwards. If we calculate, that interest amount is = 1000000 x 0.0815 x 0.25 = 20k INR.

This means, that if I pay 20k INR right away (right now), then the entire transaction would be kind of cash flow neutral (ignoring time value of money since we’re considering only 3 months time), except that if my loan would have ended in Dec 2029, it would now end in Mar 2030.

The reason i do not want to pay the EMI is that I truly believe the stock market is at a significant multi-year low, individual stocks I have been tracking are available at a P/E ratio of 2-4. Stocks I’ve always wanted are available at P/E ratios of 10-15. I think this is a significant opportunity to invest 3L rupees into the stock market at relatively no cost (20k INR + [paying EMI until mar 2030 instead of Dec 2029]).

Thoughts, anyone?

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If you had a long term load, say 10-14 years, then this would’ve been a good deal as the 20k would’ve been amortized for 10 years.

But seems your loan would be returned within the year.

In this case, this is a risky decision would only work if stock market finds the bottom + Jumps up.

The first scenario is conceivable by the end of May but not the second. There would be lots of bankruptcy and unemployment would lead of lack of demand.

Also the money printing would ensue boatloads of inflation + Huge increase in Gold and real estate demand, as such people may pass over the stock market.

So unless you’ve a long term loan, better pass this trade.

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Hello Sahil,

Yes stocks are very attractive at the moment.
You can surely avoid paying the emi but please ask yourself that after investing and not getting your returns till a certain amount of time do you have the provisions to pay the emi ?
There is no specific bottom at the moment and stocks can further go down.
Make sure you have enough safety at your end to have money for your expenses and your loans.
Invest your money not gamble.

Good luck


To my mind, definitely our markets / global markets have not bottomed out. Also not sure what kind of stocks that you are referring to which led to this decision and conviction. Just ask yourself, are those PE 2-4 stocks kind of leaders in their respective niche sectors, which can withstand the market volatility and provide those kind of good returns in the days or weeks to come ?Measure your decision against this question and then take a call. All the best !!

@Billu the full loan amount is indeed for 15 years. Just that the current loan amount is 10L because the rest of it has not been released yet. Does that change your calculation?

I think people might be missing what the point of this is: I’m not trying to find the bottom, i know we cannot do that, I just think the valuations are unreasonably low.

Suppose I buy a stock at Rs 100 because I feel the fair value is 300. The stock goes to 50 after that. I’m cool with that. Because i’m not looking to “sell out” in 3 months or 3 years. I’m in it for the long run. I intend to sell only when the underlying company does not appear good to know or if the valuation is terribly high.

@PratikS, thanks, I do have a lot of liquid cash to cover expenses and everything as well.

Let us see it from a different angle.

You see the market has fallen from it’s high, giving you mouth watering value and want to invest with a leverage of 8.15%.
Leverage can work both ways. If you win you win big and if you lose you lose big. It will make the portfolio more volatile. Check nifty leverage index for an idea.
So if you feel you can’t get this bargain again then only consider it. Only you can understand your risk profile.

Another thing to consider is that the interest rate has fallen to very low level recently (below 6% after tax). You can get a better rate of 8.15% risk free if you add extra payment to the home loan account.
Again your risk profile should guide your decision.

If only 10L is released then you will be charged on 10L ( correct me if wrong). Hence you are not saving much by post paying.

Second, if you can then delay the loan - you will get muuuuch better terms. In the short term interest rates may come down by 3%.

Third, This isn’t the bottom. There would be severe liquidity crisis in the market. The central banks and pushing liquidity but banks are sitting atop the cash knowing many people who take loans won’t be able to pay back. This is 2008 redux.

There may be bottom or a prolonged period of bottom fishing. I’d say markets would remain in bear phase till end 2022. Hence not wise to buy just now.

that makes a lot of sense.

As @akash_dasrightly pointed out, this is precisely like borrowing at 8.15% and investing in stock market. I’m not sure it is possible to avail personal loans at 8.15% at this moment. Also, i would only like to pay an EMI of 1.06L and not pay anything extra. So this suits me well.

The trouble @Billu is that it is not possible to borrow at this rate for investing in stock market while also ensuing that my EMI is only 1.06L per month.

The loan is linked to the construction of the house. So as long as my builder delays the construction, I would not be sanctioned any more loan amount. But i think it is hard to plan for that.

Lastly, I agree that this might not be the bottom. The trouble is that the RBI moratorium is only for 3 months. This means I can only borrow from my future self for these 3 months, and no more. If i were to pay the EMI now, how would I have money later on? Yes these set of EMIs would end in 1 year or so. However, im sure the builder will raise more payment request by then (I hope they do, as we know most real estate companies are leveraged and hence if their inflow dries up completely but fixed costs are still there, they might go bankrupt which is a much worse situation for me) meaning that more EMIs would come up soon.

I guess what Im saying is, I see only a short window of opportunity (3 months of RBI moratorium) to borrow 3.15L from my future self at 8.15% per annum.