Delayed Flat, Running Pre EMI: How RERA Delay Interest and Your Home Loan Interest Fit Together

Picture a Bengaluru buyer whose flat was due last spring. The tower is still under scaffolding, the builder's new date keeps moving, and every month two payments leave the account: rent for the place they live in now, and pre EMI on the home loan for the place they cannot yet move into. The question that follows is simple: does anyone compensate for the second payment?

The answer sits in two separate systems. Your home loan is governed by your contract with the lender and RBI's rules on how interest is charged. The builder's delay is governed by the Real Estate (Regulation and Development) Act, 2016, which gives allottees specific remedies against the promoter. Understanding how the two fit together helps you make the right claim in the right place.

The short answer. Your bank's interest keeps running on the amount disbursed, whatever happens on site, because the loan is a separate contract. RERA's Section 18(1) gives you a choice when the promoter fails to give possession as agreed: withdraw and get your money back with interest and compensation, or stay and receive interest for every month of delay until possession. Section 71 provides for an adjudicating officer to decide compensation, and Section 72 tells that officer to consider the loss caused. The trade-off: staying keeps your flat but leaves you carrying loan interest through the delay; withdrawing ends the wait but means starting your search again.

Why does my loan interest keep running when the builder is late?

Because your loan is with the bank, not the builder. Interest accrues on the amount disbursed under the terms of your sanction letter and loan agreement. RBI's April 29, 2024 circular on charging of interest addressed a different problem: lenders charging interest from dates before the money was actually disbursed. It does not deal with project delays.

So the pre EMI you pay during a delay is a real cost, and it grows as more tranches are released. On an illustrative Rs 60 lakh disbursed at 8.50% a year, simple monthly interest is about Rs 42,500. Twelve months of delay at that level means about Rs 5.1 lakh of interest paid while you wait. Our earlier explainer on pre EMI costs across construction tranches shows how that interest builds over a project.

One exception to check is a payment plan in which the builder agreed to bear the pre EMI for a period, sometimes called a subvention arrangement. If you are on such a plan, read your agreement with the builder and your loan documents to see what happens to that obligation if construction runs late, and who is liable to the bank if the builder stops paying. The answer is in your contracts, and it is worth knowing before a delay turns into a missed payment on your own loan account.

It also helps to write down, month by month, the interest you have paid since the possession date in your agreement passed. A simple running total is easier to present later than a stack of statements, and it makes the cost of the delay visible when you weigh your options.

What does Section 18 give me if I stay in the project?

Monthly delay interest. Section 18(1) of the Act, in the Gazette copy published on the Telangana RERA portal, applies where the promoter fails to complete or is unable to give possession in accordance with the terms of the agreement for sale or by the date specified in it, or due to discontinuance of business on account of suspension or revocation of registration. Its proviso says that where an allottee does not intend to withdraw from the project, the promoter shall pay interest for every month of delay, till the handing over of possession, at such rate as may be prescribed.

The rate is set by the state's rules, not by your loan. That means the delay interest you receive and the loan interest you pay are calculated differently and need not match. Our guide to whether to withdraw or stay when possession is delayed covers the choice in more depth.

What if I decide to withdraw instead?

Then the promoter is liable on demand to return the amount received in respect of the apartment, with interest at the prescribed rate, including compensation in the manner provided under the Act, without prejudice to any other remedy. Section 19(4) mirrors this from the allottee's side: the allottee is entitled to claim the refund of the amount paid with interest and compensation if the promoter fails to give possession in accordance with the agreement for sale.

Section 2(za) of the Act explains how the interest runs. The interest payable by the promoter to the allottee shall be from the date the promoter received the amount or any part of it until the date it is refunded with interest. That is a useful detail for loan funded buyers, because each tranche the bank paid the builder becomes an amount the promoter received on a specific date.

If you withdraw, think through the loan side too. The refund flows back against amounts that were partly funded by your lender, and you will need to close or adjust the loan accordingly. Ask your lender in writing how it will treat a refund from the promoter before you file.

Is the delay interest rate the same as what I pay for late instalments?

Yes, by design. The Explanation to Section 2(za) says the rate of interest chargeable from the allottee by the promoter in case of default shall be equal to the rate which the promoter is liable to pay the allottee in case of default. It also says the allottee's interest runs from the date of default in payment until the date it is paid.

That symmetry matters when a delayed project also sends you demand letters. If you are late on an instalment, Section 19(7) makes you liable for interest at the prescribed rate. Keeping your own payments current puts you in a cleaner position when you claim delay interest. Our piece on the same interest rate for late payment and delay under RERA explains how the two sides mirror each other.

Can I recover my extra loan interest and rent as compensation?

You can ask for compensation, and the Act tells the decision maker what to look at. Section 71(1) says that, for adjudging compensation under Sections 12, 14, 18 and 19, the Authority shall appoint one or more judicial officers who are or have been District Judges as adjudicating officers. Section 72 says that while adjudging the quantum of compensation or interest, the adjudicating officer shall have due regard to the amount of disproportionate gain or unfair advantage made as a result of the default, the amount of loss caused as a result of the default, the repetitive nature of the default, and other factors necessary in furtherance of justice.

The loss factor is where your records count. Keep your loan statements showing interest paid during the delay, your rent receipts and any other costs that flow from not having the flat on time. Whether and how much is awarded depends on the facts and the officer's assessment, so treat these records as evidence, not as a guaranteed recovery. A PropNewz project profile such as Prestige Park Lane in KIADB Devanahalli can help you track a project, but your own paper trail is what supports a claim.

What should I do if my flat is running late?

Use these steps to keep both sides of the problem organised.

1. Find the possession date in your agreement for sale and note how many months have passed since.
2. Keep paying instalments and EMIs on time so that your own default does not complicate a claim.
3. Download loan statements showing interest paid during the delay period.
4. Keep rent receipts and records of other costs caused by the delay.
5. Decide whether you intend to stay and claim monthly delay interest, or withdraw and claim a refund.
6. If withdrawing, ask your lender in writing how a refund from the promoter will be applied to the loan.
7. File with the Authority or adjudicating officer as appropriate, attaching your records of loss.

Frequently asked questions

Does my bank stop charging interest if the builder delays possession?

Your home loan is a separate contract with your lender, and interest runs on the amount disbursed under its terms. RBI's April 2024 circular on charging of interest concerns lenders charging interest from the actual disbursement date. For a builder's delay, the RERA Act provides remedies against the promoter.

What does RERA give me if possession is delayed and I stay in the project?

The proviso to Section 18(1) of the RERA Act says that where an allottee does not intend to withdraw, the promoter shall pay interest for every month of delay until possession is handed over, at the rate prescribed under the rules. The delay is measured against the agreement for sale.

Is the delay interest rate the same as the rate I pay for late instalments?

Section 2(za) of the RERA Act says the rate of interest chargeable from the allottee by the promoter in case of default shall be equal to the rate the promoter is liable to pay the allottee in case of default. The actual rate is prescribed under the state rules.

Can I claim compensation for my extra loan interest and rent?

Section 71 provides for an adjudicating officer to decide compensation under Sections 12, 14, 18 and 19, and Section 72 lists factors including the amount of loss caused by the default. Keep records of the extra costs you bear, such as loan interest and rent, as evidence of loss.

Last updated 2026-10-28. PropNewz Team.