Question
What is a moratorium (EMI holiday) and how does interest accrue?
Answer
Bottom line: A moratorium pauses your EMIs, but interest keeps accruing and is added to the balance, raising the total cost.
1. The pause
You stop paying for a set period, often at the start of the loan.
2. Interest
It continues on the outstanding principal and is capitalised into the balance.
3. Result
Either your EMI rises or the tenure extends — a payment holiday is not an interest holiday.
See the impact with our EMI Calculator.
This answer is general information based on the law as it stood when written and is not professional advice on your specific situation. Verify the current position and consult a qualified professional before acting. See our disclaimer.