How the Moratorium Calculator works
A moratorium — often called an EMI holiday or payment holiday — is a period during which a lender allows a borrower to skip scheduled installment payments. Lenders offer moratoriums on education loans while a student is studying, on home or personal loans during financial hardship, and occasionally across an entire portfolio during a broad economic disruption. The catch is that interest almost never stops accruing just because payments do. This calculator shows exactly how much that pause adds to your loan.
The formula
During the moratorium, the lender typically compounds the unpaid interest monthly and adds it to the outstanding balance — a process called capitalization. For an original loan amount P, an annual interest rate r, and a moratorium of m months, the balance owed at the end of the moratorium is:
P′ = P × (1 + r/12)m
The interest accrued during the moratorium is simply P′ − P. Once the moratorium ends, that capitalized balance P′ is repaid over the remaining tenure using the standard reducing-balance EMI formula, with n as the number of remaining monthly installments and r as the monthly interest rate (annual rate ÷ 12):
EMI = P′ × r × (1 + r)n / ((1 + r)n − 1)
If the interest rate is 0%, no interest capitalizes and the EMI formula reduces to EMI = P′ / n — the balance simply split evenly across the remaining installments.
Worked example
Take a $200,000 loan at 8% annual interest with a 12-month moratorium followed by a 60-month repayment tenure. The monthly rate is 0.08 / 12 ≈ 0.006667. Over 12 months of capitalization, the balance grows to roughly $216,600 — about $16,600 of interest added to the principal before a single EMI is paid. Amortizing that $216,600 over 60 months at the same monthly rate gives an EMI of about $4,392. Across the 60-month repayment tenure you pay back roughly $263,510 in total, of which about $63,510 is interest — the $16,600 capitalized during the moratorium plus about $46,910 accrued during repayment.
What moves the numbers most
- Moratorium length: every extra month without payments lets more interest compound onto the principal, so a 12-month moratorium capitalizes noticeably more interest than a 3-month one.
- Interest rate: capitalization compounds monthly, so a higher rate increases both the capitalized amount and the EMI more than proportionally.
- Repayment tenure: spreading the capitalized balance over more months lowers the EMI but increases the total interest paid, exactly like extending any amortizing loan.
Interest-only versus full moratorium
Some lenders offer an interest-only moratorium, where you pay just the interest each month so the principal never grows — in that case there is no capitalization to calculate, and your post-moratorium EMI depends only on the original principal and remaining tenure. This calculator models the more common full moratorium, where neither principal nor interest is paid until repayment resumes, which is the structure used in most education-loan and hardship-relief moratoriums. Check your loan agreement to see which type applies before relying on the capitalized-balance figures here.