Defaulted on home loan EMIs? Relax! Bank can’t seize your house if you follow these RBI protection rules
You take a home loan for a longer duration compared to other credit facilities. You pay them off over periods that can sometimes span 20 to 30 years. Because of this longer duration, it also brings some uncertainties regarding repayment of the loan, as 20 or 30 years is a considerable amount of time during which you may experience various financial ups and downs.
You get a loan from any bank or financial institution based on your present income and repayment capacity, but nobody knows about future circumstances. You may encounter some financial challenges like losing a job or facing a health crisis, especially considering the long duration of your home loan. These challenges can lead to difficulties in repaying the housing loan.
If you fail to pay the scheduled EMIs to the bank or lender over a certain period, it leads to default. However, it is important to note that if you miss the EMI for one or two months and then resume paying the installment again, clearing the pending installments with a penalty, there’s usually no problem. But if you miss consecutive three monthly EMIs, your home loan will be categorized as non-performing asset (NPA) in their book. Typically, banks allow a 90-day window for communication and remediation efforts during this period.
Also Read: Buying a house? Neglecting these factors can prove costly
A home loan default has multiple negative impacts on you as a borrower. The immediate effect is a decline in your credit score, while the most significant long-term consequence is the difficulty you’ll face in obtaining any future loans.
“Non-payment will have a negative impact on your long-term finances. Late payments will start wrecking your credit score. Non-payment for more than 90 days can lead
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