The Buyt Desk
The bank or housing finance company that had approved your loan and helped you buy the property holds all the legal rights to recover their corpus. Thus, if you miss paying the EMI of a home loan for consecutively three months, the lender by using its rights can send a legal notice for the loan repayment. If you are still unable to pay the EMI, the lender has the right to auction the property and recover the amount. It is imperative to note that the home loan is a securitised loan, which means the lender owns the property until you repay the entire amount.
Furthermore, missing loan EMI makes you a defaulter and ruins your credit score. Therefore, you should pay your home loan EMI on time instead of side-stepping it. However, if you are in a tight spot, some options are available that could help you.
Talk To Your Lender – If there is a genuine problem behind your inability to pay the loan, sit with your lender and try to figure out a solution. The lender would study your case, check your payment history, and based on that would suggest a solution. A few options available with them that might give you relief for some time. They are:
Restructuring Of Loan – Restructuring of loans means increasing the repayment period and reducing the EMI. Your lender can use this option provided that you have left scope for the same and have paid previous EMIs on time. The loan tenure and EMI amount will depend on your age and eligibility.
Deduction In Interest Rate – Your lender might offer you a lower interest rate on terms and conditions. Your lender can decrease the interest rate if the prevailing rate is lower than what you are already paying. However, it happens only in exceptional cases.
Case-specific interest rate deduction below the grid level is neither permitted nor in practice. It can happen only in the case of settlement. In such a case, the lender closes the home loan account and asks you to pay the remaining amount either in one go or partial. The drawbacks of this option are many:
-
Paying the whole loan amount in one go in a tight situation is difficult.
-
It will badly affect your credit score.
-
You can’t delay this payment.
Therefore, every move in this direction should be thoughtful. Also, you can seek advice from experts if needed.
Grace Period – Your lender can give you a moratorium facility for a certain period.
Other Options to Pay Home Loan EMI During Difficult Time
Loan Insurance – Various loan insurance plans are available in the market that could help you pay off your home loan EMI for a short period. The loan insurance service turns advantageous in a situation like, job loss, bad medical conditions, etc. For a short time, the insurance company will pay the EMI. You can restart paying the EMI once things get back to normal.
Use Unused Assets – If you have lost all your savings and no scope is left for paying the EMI, use the non-productive asset. Gold, land, and car are a few options. Taking a gold loan has become easy and comes at a lower interest rate.
Partial withdrawal from the PPF account is allowed in some exceptional situations. If you have a PPF account, you can make a partial withdrawal from it to address the financial emergency.
Conclusion – All these options are available to address an emergency. But each option has its downside. You should keep an emergency fund which can help you sail through the tough time.
