A moratorium meaning refers to the duration during which the borrower is not required to make the EMI payments related to any type of loan.
In simpler terms, the moratorium period is an EMI holiday, after which you can start repaying.
Moratorium Period Example
Suppose you secured a home loan of ₹20 lakh for 20 years but are facing delays due to construction setbacks. Your bank or lender offered you a 6-month moratorium period.
If the loan start date is January 2025, your EMI payment will begin in July 2025. During these 6 months, you do not have to make any EMI payments on your home loan.
Benefits of the Moratorium Period
By understanding the moratorium meaning in finance, you can:
- Enjoy financial relief during difficult times such as sudden unemployment, medical emergencies and financial slowdowns
- Avoid loan defaults and penalties since you get sufficient time to manage your essential expenses
- Protect your credit score, which is ultimately helpful in ensuring access to further credit applications
How to Apply for a Moratorium Period on a Loan?
- The first thing is to check whether your loan qualifies for a moratorium.
- If yes, then apply through your lender’s website, customer service team, or by visiting a nearby branch.
- Then, you must submit your proof of income and the proof of financial hardship you are currently facing.
- After submission, the lender thoroughly checks every document and verifies your request.
- If everything seems right, the lender issues a moratorium.
However, you should keep records of all communications and check your credit report; it must show ‘moratorium approved’ to avoid further issues.
