What to do when you are unable to pay Home loan EMIs

  • Buying a home is one of the most expensive investments you are likely to make in your life time. With property rates reaching new heights every year, home loans have been designed to meet your need of owning a house. Once the bank gives you a home loan, they expect you to start paying your EMIs every month till the end of the loan tenure. However what happens if you are unable to pay the EMIs? This guide will tell you what to do if you stop paying your EMIs.

    Skipping your EMIs

    The first thing you need to know that a bank will not foreclose the loan if you defaulted on one or two EMI payment. Loan foreclosure is the last action a bank wants to exercise. But if you continue to fail paying your EMIs for three consecutive months, the bank will send you due reminders of the same. Lack of response from your side will prompt the bank to send you a legal notice and you will be termed as loan defaulter.

    If you are declared as a loan defaulter

    Once you become a loan defaulter the bank will start the process of seizing your property. They may auction your property and recover their due amount. The bank usually gives six months of time before auctioning off your house. Within these six months you can approach anytime and settle the things out with Bank.

    What to do once you are declared as a loan defaulter

     Ask for a moratorium period - If you want to take any action you need to take before this auction. You should meet the bank officer and explain your situation, as to why you are unable to pay the EMIs as of now. Whether due to a health issue or you lost a job, if you feel can persuade bank that you will get onto track in next 3-4 months, then bank can offer you with a moratorium period for some months.

    Loan restructuring - If the reason for your financial woes is rise in interest rates and you are finding difficulty in managing your EMIs, you can request the bank to restructure your home loan. The bank can increase the tenure your loan and your EMI would go down.

    Loan refinancing - If your bank is not ready to structure your loan and you find some other bank offering loan at a rate which is manageable in your financial arrangement , then you can consider refinancing your loan but do calculate your  exact expenses in terms of processing charges and other levies.

    Liquidating your investments - The final step that you can resort to, if above mentioned options do not work out is that you liquidate your existing investments such as deposits or mutual funds to pay the EMIs. You can use this amount to make part payment for the loan which will reduce the EMI in future.


    These guides are not legal advice, nor a substitute for a lawyer

    These articles are provided freely as general guides. While we do our best to make sure these guides are helpful, we do not give any guarantee that they are accurate or appropriate to your situation, or take any responsibility for any loss their use might cause you. Do not rely on information provided here without seeking experienced legal advice first. If in doubt, please always consult a lawyer.

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