Do not worry if you are unable to make the equivalent monthly instalments on your mortgage. There are strategies for avoiding the problem. Read on to learn more.

One of the largest financial obligations of your life would be purchasing a property. Home loans may take between 10 and 30 years to pay off, and the equivalent monthly instalments (EMIs) must be made each month until the loan is fully returned.

However, there are situations when you may be unable to make your EMI payments on time or entirely for a few at a time due to circumstances like job loss or the need for urgent medical attention, as occurred during the Covid-19 blackout.

The Effects of Skipping Home Loan EMI Payments

What would happen then if you didn’t make your EMI payment on time?

To begin with, you would be charged more. Second, your credit rating would suffer. Finally, if you go too far behind on your payments, you run the danger of losing your property, warns Atul Monga, founder and CEO of Basic Home Loan, an Indian fintech business that provides home loans.

Monga claims that these fees often change based on the sort of mortgage you have for your property.

The late charge is normally added to your account the day after your payment is due and is calculated as a percentage of your outstanding loan total. In addition to the late charge, your lender could also notify the credit bureaus about your late payment, which might lower your credit score, says Monga.

If there is a danger that you could skip an EMI, he suggests getting in contact with your bank or lending organisation to discuss the situation and create alternate arrangements.

When Will Bank Take Control of Your Property?

If you don’t make payments on your house loan or any other loan you took out using your property as collateral for an extended period of time, your bank may take possession of your home (property).

In the event that you break the conditions of your loan arrangement, the bank may potentially confiscate your property. You will normally be given an opportunity to redeem the property by paying past-due payments if your property is taken by the bank, according to Monga.

After sending you a legal notice, banks often allow you a window of two or more months to make up any missing payments. The bank will issue you an auction notice informing you of the estimated worth of your property if you continue to be in default. The bank will proceed with the auction procedures if you don’t begin making mortgage payments before the auction date, which is typically one month after you get the auction notification. You may approach the bank at any point to reach a settlement throughout this whole time.

How Should You Respond in Such a Case?

You should contact your bank as soon as possible if you are having trouble paying your home loan EMIs due to financial troubles. Approaching your lender and asking for a loan adjustment is one possibility. This can include extending the loan term or decreasing your home loan’s interest rate.

Many banks are prepared to collaborate with borrowers to find a solution, whether that entails delaying payments or offering other types of support.

Monga continues, “Try reaching out to a financial counsellor for assistance if you’re unsure of what to say or concerned about how your bank may respond. They may provide advice on what to say to your bank and the best course of action in your specific circumstance. Don’t overlook your money issues. Find out what options you have by talking to your bank.

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