Repaying your home loan
For Amit, owning a house was one of the fundamental necessities of life. For making his dream come true, he decided to go for a reliable home loan being offered by a popular bank in India. Due to the persistent hard work that Amit had put in, he was finally able to get a home loan that had a lower rate of interest. However, he didn’t realise that missing even one or two EMIs could make him stand in the list of defaulters. When his father got ill, he had to spend a lot of money for the medical bills and this drained off his savings. Most people, who become loan defaulters, definitely have certain options at their disposal for handling such a situation.
Organisations like CIBIL strive hard for the betterment of home loan borrowers. Not only can you get complete information on home loan repayment norms, but also your entire credit history with a single click. People who have already become defaulters can also focus towards improving their credit score so that they negotiate with the bank in a better way. A default takes place when a client is not able to make the monthly payments repeatedly. You need to understand that it is not the end of the road and there are various things that you could do besides indulging in a dialogue with the bank to get the situation under control.
Every bank offers different interest rates; hence, you need to find a loan that has a decent overall cost so that you can repay it easily. Have a closer look at the interest rates being offered by a few prominent Indian banks.
| Bank | Interest Rate |
| ING Vysya | 10.75% – 11.25% |
| DHFL | 10.50% to 10.75% |
| India Bulls | 10.25% to 11% |
| Allahabad Bank | 10.20% to 10.45% |
| Central Bank of India | 10.25% |
As on 5th April, 2014
The Notice Regarding Home Loan Default
Your banking institution won’t consider you to be a home loan defaulter if you’ve missed just a single payment. However, if you repeat the same mistake for the next 2 or 3 installments, then the bank will send you a notice which acts as a reminder for making the EMIs. If you fail to take an action, a legal notice is sent to you. This is the time when you’ll be regarded as a loan defaulter. The last option which the bank has is to recover the property from you. The procedure for taking over the home usually begins after 3 to 5 months when the legal notice has been sent to a defaulter.
Negotiations with the Bank
Banks themselves do not want to seize your property and so negotiation could prove to be an ideal choice in case you’ve become a loan defaulter. Arrange a meeting with the bank authorities and try to make them understand why exactly you haven’t been able to make the payments in time. Ask for some feasible solution that could benefit you and the bank, both. If possible, try and get your loan restructured on healthier terms. Loan foreclosure, too, is a good option if you’re willing to sell your property.
Rescheduling of the Loan Term
This is a great adjustment option that benefits not just the lender but the borrower as well. If the bank finds your situation to be genuine, they’ll agree to reschedule your loan term. They are simply going to extend your loan tenure so that your monthly EMI payments reduce significantly. This helps in getting immediate relief from the burden of repayment. This method is much better than pre-payment because it hardly has any processing fee.
Deferring Payments
A borrower can even ask the banking institution to defer a few monthly EMIs in case he is anticipating a big rise in the cash flow from his job or maturity of some financial funds. However, there is a certain amount of penalty that you’ll have to bear if you choose this option.
One Time Settlement
Banks usually agree on a one-time settlement and so you could consider repaying the entire amount at once. However, as a borrower, you must ask the bank to waiver off certain charges. In case your financial condition is very bad, you can file for bankruptcy as it will allow you to get rid of the home loan commitment.
Repossession
In case the options mentioned above fail to work for you, the bank will move forward with the option of repossession of your assets. The recovery procedure is performed legally and a 60 day notice is sent to you so that you can get some time to settle your account. A demand possession notice is sent to you after 60 days if you fail to make the payments. As per this notice, the borrower needs to hand over the property papers to the bank.
Always remember that facing a situation strongly could help you get out of it. Take every step cautiously to come out of the default situation. Get essential information on home loan defaults by checking out at https://www.bankbazaar.com/home-loan.html.
YOU MAY ALSO WANT TO: Calculate your EMI – Home Loan EMI Calculator