What to do when you can’t pay your home loan EMIs?

Having your own home is the most expensive purchase and in the ordinary person’s life, it is usual to take a loan for the funding your home. However, there could be the chances that one might get stuck somewhere due to the shortage of funds and not able to pay EMIs of Home loan. There could be several financial crises including loss of job, illness, some medical emergency, etc.

“But if you continue in defaulting to pay EMIs, Bank would seize your home and auction it in the market” This statement creates tension and make you panic because the reality is you are legally bound to pay off your loan.

So, No one wants to let such situations arise. Although, if you treat such situation carefully, it might never arise.

Now, the question is how to treat with the situation when you can’t pay your home loan EMI?

Don’t worry! Here I’m going to share with you the practical options available to come out from this problem, all you have to do is to take initiative:

  1. Negotiate with your lender: Your lender is the first option to help you. Yes, Contact them, arrange a meeting and explain your genuine situation that why are you not able to pay EMIs. Take the active step before the issue arises. It would be beneficial if you could take your all loan documents to show them that you have a good past record.

As a genuine borrower, you will be able to convince them to pay your loan as soon as you can as were paying earlier EMIs on time, there are high chances that lender will allow you some time to pay EMI.

  1. Restructure your loan: Sometimes situations arise when EMI is too high, due to an increase in interest rates or might be some other temporary financial problems and you are not able to pay such a huge amount of EMI.

In such cases, you have an option to restructure/reschedule your loan. Here, the bank reduces the amount of EMI and increase the tenure of the loan period. You just need to approach the bank with the relevant documents and convince them that the problem is temporary and would be resolved soon.

  1. Grace Period: When you are in shortage of money for some time like you have lost your job but sure enough to get another one within few months and will be able to repay your EMIs again time, you can approach your bank for deferral of your payments.

Bank will help you to grant some relief by allowing you a grace period and you can start repaying your EMIs after some time as discussed with the lender. However, it should be noted that with the deferred payments you need to pay late payment penalties (Delayed payment charges).

  1. Lump-sum settlement: If the crisis is too deep and you feel that there are no chances of any improvement in your financial status in the near future, you could go for a Lumpsum (one-time) settlement.

Here, you have to negotiate with the bank and the bank settled the case by taking the lump-sum amount from a borrower but, for this to happen, you will have to negotiate with the bank and convinced them.

However, you should be careful that settling your loan would get reflected in your credit report and could create in the problem while looking for another loan in the future.

  1. Liquidating your Investments: In case you are not able to negotiate with the lender or the cash inflow problem is regular, you have the option to liquidate your investments such as Fixed Deposits, Mutual funds, etc. which will help you to pay your EMIs and save you home.

Conclusion: You are not the single person who faces the challenge of paying EMIs on the due date and the bank knows well how to help you out when you stuck in such financial problems. Therefore, banks are always with you to deal with it but you have to take a step before the situations get worse. So, they were few effective ways to deal with a problem of not able to pay EMIs, which eventually bank allows.

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