What happens if you fail to repay your home loan?

 Nobody likes to fail on a house loan since it not only hurts their credit score but also makes it difficult to obtain money from banks and non-banking institutions in the future.Your lender owns your property and keeps the original property paperwork as long as you haven't paid back the total loan amount.
 

When you take out a home loan, you must repay the entire amount in Equated Monthly Instalments, including the principal and interest (EMIs).Your bank relationship will remain intact as long as you pay your EMIs on time. 

When conditions become onerous, we may be unable to satisfy our financial obligations, particularly in situations such as COVID-19.The Reserve Bank of India has imposed a six-month embargo on all term loans to prevent loan defaults, although it is unclear when this situation will return to normal.Borrowers are also at danger of failing on loan repayments due to pay cuts and job losses.


With this in mind, it's critical that you understand how to deal with a circumstance in which repayment is required for a longer term than intended. 


 

Loan becoming NPA

When you miss 90 days of payments on a loan, it becomes a non-performing asset (NPA).Banks only consider a loan to be non-performing if you have missed three payments in a row.As a result, when borrowers default, banks do not instantly seize their assets.  

"Because all house loans are secured by a mortgage on the asset, the bank or financial institution can file for foreclosure.They can sell the item by public auction or private contract after attaching it.
They can use the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, or the SARFAESI Act to enforce their rights.The latter is the most expedient solution "Sagar Kadam, Partner at DSK Legal, agrees.  

Impact on credit score

When you default on a loan, the first thing to suffer is a drop in your credit score.It will be tough to borrow money from any lending organisation in the future if you do not have a good credit score.
Additionally, because your property is mortgaged to the lender, they have the right to repossess and auction it.   

What are your options? 

People frequently turn off their phones and cease communication with their banks.This is where the true issue arises.

"If you are currently having trouble repaying your debt, you can apply for a moratorium to avoid default.However, you should not stop communicating with your lender if you have already defaulted on your loan or are at risk of defaulting in the future due to job loss or a wage decrease.Inform them of your inability to pay, as they may be able to provide you with a solution you hadn't considered "AK Bansal, former Executive Director of the Indian Overseas Bank, adds (IOB).  

Your lender will give you an opportunity to submit your case and explain what went wrong.
You can ask your bank to put your payments on hold for a few months.There is also the option of lowering the EMI, however this will result in a lengthier repayment period.You can also request a loan restructure, in which the terms and circumstances of the loan are eased and the interest rate is reduced. 

"A customer has the right to demand that I the bank/financial institution give proper notice and opportunity to pay the arrears before enforcing the security; (ii) ensure that the asset has been correctly valued; and (iii) any excess proceeds from the sale of the asset after satisfying the bank/financial institution's claim be paid over to him/her," explains Kadam. 

"It's a good idea to set aside money for an emergency fund that you can use to repay loans if you run into financial difficulties.It's possible that this wealth will be six times your current monthly salary "According to Bansal,Some business executives we spoke with, on the other hand, said they create a corpus for at least a year.If you have loan insurance, it may be able to assist you in repaying your EMIs. 

Instead of turning off your communication channels, speak with your bank/financial institution's relationship manager to learn about your options.You can then choose what best matches your needs.
Remember that if you handle your finances carefully, you can always rebuild your financial health. 

Conclusion

We can operate in both established and emerging markets at any point in the loan lifecycle. Both simple and sophisticated huge syndicate transactions are supported by us. To know the best deals & offers, you can dial our helpline number +91-9477079053. They will guide you in a possible way. If any other issue then contacts me at Best Housing Loan in India.

 

Comments

Post a Comment

Popular posts from this blog

What information do you need to apply for a business loan?

Image
 A business loan or overdraft could assist you with your next purchase, cash flow management, or business expansion. You (and any directors, partners, or guarantors) may be asked to give the following information when applying for company financing: Financial statements, preferably prepared by an accountant Proof of individual income Bank statements Identification A few extra things if you’re a start-up business These documents might assist your financial provider in gaining a better understanding of your company's financial status. You can apply for a variety of business funding options, including business loans, overdrafts, and credit cards. If you're asking for asset financing, you may be required to provide additional documentation. Financial statements Your financial statements will indicate your asset, liability, and net worth positions, as well as your income and expenses, all of which will be utilised to assess if you can meet your current and proposed payback obligatio
Read more

A Guide to Eligibility for Business Finance

Image
 Almost every firm will require financing at some point. Some businesses require money urgently, such as to pay employees or pay a tax bill. Some businesses require it to support their day-to-day operations, such as purchasing inventory to fulfil consumer orders. Some businesses require it to expand, such as to pay for new facilities or machinery. Whatever the cause, the company seeking funding must meet certain eligibility requirements. We've outlined the eligibility criteria you should be aware of, as well as how you may prepare for them, in this article. What is eligibility? Eligibility is a method of determining how hazardous it is for a lender or finance provider to give you with funds. It should also tell them how much money they'll be able to give you responsibly. Why is eligibility important? It would be a foolish move on the lender's part to lend you money if you couldn't afford to pay it back. In that case, they'd be out of pocket, so it's in their bes
Read more

Common challenges you face while availing a business loan in India

Image
 A credit infusion is frequently the best solution to a company's different financial issues.It provides relief from operating financial shortages and opens up new growth opportunities.An unsecured business loan from a company like Tata Capital may be exactly what your company requires.Complete transparency, quick access to cash with minimal documentation, a simple application process, and, most crucially, unsecured business loans are all available to you.  However, obtaining a business loan in India can be difficult at times.To begin with, there is a lack of access to cash, transparency, and, most critically, the collateral required to secure the credit.   Let's take a closer look at some of the obstacles you can encounter when applying for a business loan in India, as well as how to overcome them.An unsecured business loan may be the solution to these problems.   Collateral requirements Despite efforts by the Ministry of Small and Medium Enterprises, the RBI, and SIDBI to pro
Read more