What happens if a borrower is
unable to pay his/her home loan EMI? This is a question that arises in the mind
of every home loan seeker, but they’re too afraid to know the answer. Getting a
home loan is a big step in everyone’s life. But what if, due an unforeseeable
circumstance you find yourself in the middle of a financial crisis and are
unable to pay your home loan EMIs? Will you immediately be termed as a loan
defaulter? The answer is no. The process of becoming a defaulter is a long one.
If a borrower is unable to pay his or her home loan instalment once, due to an
unforeseeable expense or a financial emergency, the bank will not immediately
term him or her as a defaulter. If you miss one EMI the most a bank can do is
send you a reminder mail regarding the same. The bank may also call the
borrower to ask about when the payment will be made.
The trouble begins if a Home Loan borrower
fails to pay his EMI three months in a row. The bank will send him/her, a
number of reminder mails and finally a legal notice. This is when the borrower
is termed as a loan defaulter. The term can severely affect one’s CIBIL score,
making it difficult for them to borrow in the future. If the borrower fails to
respond to all of these notices and calls and still fails to clear his/her
dues, the bank will send an officer to their residence to affix a notice on
their door or even print a notice in the newspaper. In three months after this,
the bank will declare the property as a non-performing asset. In two months
after that, the bank will take possession of the property and if the borrower
fails to clear his dues in six months the bank will auction it off.
No one wants to be in this
situation, but the future is a tricky thing and the only thing you can do to
arm yourself for whatever it throws at you is to be prepared. Here’s how you
should handle your Home Loan
EMIs while going through a financial crisis.
1. Get in touch with bank and inform them about your
problems, they may be able to give you some leeway or at least wave off the
late charges on your EMI.
2. Re-negotiate your loan by increasing the
tenure, so you can pay smaller EMIs.
3. Get home loan insurance in advance, so you don’t
need to worry about your loan repayment.
4. Spend wisely, keep track of
all your expenses, avoid unnecessary expenses and save up to pay your EMIs.
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