Home Loan: Every person’s dream is to buy his own house or house, for which you have to pay a lifetime’s earnings. If those who do not have such a huge amount, such people are forced to take a home loan. Let us tell you that there are many types of home loan products available in the market today, and you can choose the best product according to your needs. If you delay the payment of EMI, then there can be huge loss.
3 Months Continuous Delay
If you delay in paying your EMI for 3 consecutive months, then it is considered as a minor mistake. In this case, the bank may start sending you a reminder for the payment, but the problem starts when the delay gets worse. A delay of more than 3 months in repayment of EMI is considered a big mistake. In such a situation the lender can initiate the process of auction of the property for recovery of the dues under SARFAESI Act-2002.
What will happen with delay in EMI payment
Delay in EMI will attract penalty around 1% to 2% per month on the outstanding amount. Also, there is a provision of minimum prescribed amount. If you make a big mistake, the bank can declare your loan as NPA and the recovery process will start later. Bank notices are usually sent before a loan is declared as NPA.
Third Party Use
Third Party Agents are used by the Bank to recover their money from the accounts which have been declared as NPA. You may have to face some trouble in this. Having said that, find a way to repay this outstanding amount. Even if you have made a mistake, you should behave respectfully. Any kind of threat etc. may result in loss to the lender.
Impact on Credit Score
Irregular repayment of Home Loan EMIs will affect the credit score. If the borrower frequently defaults on EMI payments, his credit score may go down. Most of the banks reset their loan interest rate at regular intervals wherein they reset the applicable interest rate based on the ongoing repo rate and the risk premium calculated based on the borrower’s credit score.
< p style=”text-align: justify;”>Don’t transfer and take new loans
Once your home loan account is declared NPA once again, there is a lot of problem. In such a situation, if you want to transfer your home loan to another bank or financial institution, then the new lender may reject your application on the basis of poor repayment history. Such borrowers may also face difficulty in availing other categories like personal loan, car loan etc.
Avoid taking loan
If you are facing money problem, you can pay EMI by borrowing from your friends or relatives. You can take an OD (overdraft) against your FD or Life Insurance policy, and pay the loan EMI.
If you are facing uncertain liquidity setbacks, you can consider some of your low-interest investments like FD Or you can liquidate liquid funds so that you can repay the EMI. You can reduce your PF.
Must create emergency fund
Maintain adequate emergency funds to ensure adequate liquidity to pay on loan EMIs during emergency. Planning before taking a loan helps you prevent EMI defaults.