A moratorium period is a temporary window, often at the start of a loan, during which the borrower is not required to pay the full EMI. It's commonly seen with home loans for under-construction properties, where you may only pay interest on the amount disbursed so far, or education loans, where repayment is often deferred until a set period after the course finishes.
It's important to understand that a moratorium doesn't mean the loan is free during this period — interest usually continues to accrue on the outstanding amount, and this accrued interest is often added to the principal once regular EMIs begin, increasing your overall repayment amount. Some lenders also offer optional moratoriums during genuine financial hardship, though this typically increases the total interest paid over the loan's life.