Buying a home is a dream for many but only a few individuals can actually make their dreams come true. Home loans have been specifically designed to let you make such dreams come true without having to pay all the money up front. However, once the loan is approved and disbursed, the bank expects you to pay the EMI due till the tenure of the loan ends. If you fail to pay the EMI on time because of losing your job or perhaps due to a medical emergency, you will become a loan defaulter and bank will initiate the process of taking over your property and selling it through an auction to recover your loan amount. Thus to provide a solution to this problem, we have listed a few things that you can do when unable to pay your home loan EMIs:-
- Negotiate: The foremost thing that you must do after becoming a loan defaulter is to negotiate with the bank over this issue. The lender will always be ready to talk with you about this issue as they find it the easier way to resolve the problem rather than going through the tiresome process of taking over your asset forcibly.
- Ask for a grace period: You can ask for a grace period from the bank to pay the loan. You can clearly explain to them the reason as to why you have not been able to pay the EMIs in a timely manner. Banks sometimes give loan defaulters the grace period for resuming EMI payments with some penalty.
- Go for loan restructuring: This is an apt solution when your home loan interest rates have been escalated and you may not afford the increased EMI. As part of the loan restructuring, the lending bank will increase the tenure of the loan upon which, your individual EMI payouts would go down. Though this will result in you paying more, it will be better than losing possession of the property.
- Seek assistance from credit counseling centers: There are many counseling centers available in many banks that may help you with this issue. They will provide you the appropriate solution of your problem by giving the fair knowledge of the thing that you should do to keep you away from being snared in a debt trap.
- Liquidate your investments: If all the aforementioned options fail to work, liquidating your investments is the last option that can come to your rescue. You can liquidate your existing investments such as deposits or mutual funds to pay the EMI’s. In case you have a life insurance policy such as an LIC policy, you might try to get a loan against the policy. You can then use this amount to make part payment for the loan which will reduce the constantly increasing EMI’s. There is no harm in doing this as it will keep you defaulting on your home loan. Besides life insurance, equities, fixed deposits or other savings can also help you get a secured loan.
- Last Option: When you are left with no other option than to sell off your prized possession in order to pay off the home loan amount, make sure your property is sold at a good price. This will not only help you pay the debts but you will also be left with a bit of extra cash at your disposal if the resale value is greater than the original loan amount.
Conclusion: These are a few of the top options you have in case you are unable to pay your home loan due to whatever reasons. To avoid getting into such situations in future, make sure you have at least 4-5 months of expenses that should be kept aside for the emergency purpose. Besides you must also have individual health insurance and critical illness policies for you and your family that will pay for the sudden medical crisis, during unemployment or in any other adverse situations.