Home loan EMI: What to do if you can’t pay

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All About Home loan EMI

Buying a house is the most expensive and important decision to make, no common man is so sufficient to pay the entire amount from saving, so we take Loan.

There may be any reason behind this. Will the bank take your property is you miss 3-4 EMI’s? No, bank will not do like this, you will be given prior notice, and if you continue to do same for 6 months, the bank will seize your property.

Lenders are willing to negotiate

Seizing your property is the last option that is with the bank. With the act of Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI) the bank has the power of taking your property if you are not repaying the Loan.After three warnings, bank will send you demand notice, in that you will be asked to pay all the dues in the given period of time. If you fail to do so, then your house will be seized.

Lenders willing to offer leeway if the borrower is serious about paying the dues.Finally, the bank sends you notice after the first default stating the actual value of your property and stating the date of auction of your house.

The bank is more interested in recovering the sum taken as Loan if you repay the amount within six months. The bank will not take any action.The final stage is usually a letter from the Debt Recovery Tribunal (for the loan amount greater than 10 lakh). The hearing is set by the tribunal, and you have to attend that hearing. If you still want to take an extension to repay the loan, then the bank will give you some more time for that.

What are your options?

Tell the reason why you are unable to pay the EMI’s. If you lost your job, and you are sure that you will l get another job within 6 months. The bank will provide leverage up to 6 months. If due to increasing interest rates the price of your EMI is rising, and you are unable to pay the EMI. The bank will restructure your loan and will increase your tenure period.

Home loan EMI

Ensure that credit score is not adversely affected
If you have taken any insurance of you job, the insurance company will pay your three EMI’s, but make sure you lost your job due to some genuine reason like health reasons or layoff, not because you were fired.
Ensure your credit score is not affected badly. If it happens, then the bank will not sanction you loan in the future. Until you secure a good credit scores.

Dip into your savings and redeem your investments

Even if you have missed one or two EMI’s, your credit score will be affected, and with regular default it will be difficult for you to get loans or credit cards in the future. You should have a word with the bank regarding the repayment of the loan. If you repay the loan without any backlogs, then it will improve your credit score.

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