Home loan EMI is the major thing one must consider while calculating monthly payments. As Home Loan is a long term commitment usually it takes 20years or more. Maintaining regular EMI payments becomes difficult if you incurred losses in your business, if you lose job, if you have spent lot of money on medical treatment for yourself or for your family, if you have paid your child’s education fees, if you planned to enjoy your holidays, if you need to do some functions or if you planned wedding this month. There may be many reasons for which you unable to pay your home loan. In such cases, the following are the steps that you can take to come up from the situation if you fail to pay your Home loan EMI according to the given schedule.
Know How It Works
Don’t worry, if you have failed to pay one or two of Your Home Loan EMI’s, the bank will not seize your home. Seizing a home is the last option banks prefer. Banks feel it is better to avoid to seize and auction your property as it is the long and problematic process. But missing even a single home loan EMI will badly effect your credit score. Hence, it is better not to miss the single one.
But if you missed 3 or more Home Loan EMIs, then the bank come into action and send a legal notice for you asking to pay your due EMIs. If you keep on increasing your dues and do not respond to bank, then they will send final notice for warning you that your house will be auctioned if you do not pay all the dues. If you are able to continue paying EMI’s even at this point of time. The auction will not take place. Thus, you will have approximately five to six months after you missed the first payments to settle all the dues and start repaying. If you can’t pay even after this 6 months period, then keep in mind the following options to save your property.
Ask for time: Ask your bank to give some time and provide the evidence of genuine reason why you missed the EMIs. Some banks consider valid reasons such as emergency medical bills, loss in business and loss of job and provide you with the grace period. Most banks will allow you to continue your payments after this period but they impose penalty. But, it is necessary to show the evidence to prove why you dint paid the previous EMIs.
Restructure the loan: If you think that you can’t pay your loan even in future because of the personal expenses and high interest rate, then ask your bank to restructure the loan. The bank may help you by reducing each EMI amount and increasing the tenure of the loan. However, it depends on rules and regulations of bank to restructure your loan.
Use Your Capital Assets or Investments: If bank is not helping you by providing grace period or other alternatives, you can utilise your investments such as fixed deposits and Mutual funds to clear this dues. You can also sell your non-profitable insurance policies to pay off EMIs till your financial condition improves. You can also sell capital assets such as vehicles and other valuable assets to settle the loan.
Choose other options: There will be many reasons for inability to the home loan EMIs and it may differ from one person to other. You can get loan against the surrender value of your financial products such as PPF, LIC policy etc. Some Financial products like Insurance policies help to clear your EMI dues for about two to three months in case of job loss or other emergencies.
Seek Help from Counselling Centres: There are counselling centres provided by bank that will help you to settle your existing home loan easily without taking any additional debt. They will understand your situation and will guide you to manage and pay off your loans without defaulting it.
If all of the above options fails in your case, then it will be better to sell your property. Bank will be the executor of this sale. By doing this, you can clear all home loan amount, banks charges and penalties and remaining amount you can keep in your pocket. You may lose your property by this sale but you will be free from the burden of your missed EMIs.