For any average person, buying a house is something that inevitably leads to taking a home Loan. Instead of fully exhausting his savings, home loans provide an easy option of payment, and these EMIs can be calculated very easily through EMI calculators. You live on a tight budget and probably exhaust most of your salary to meet EMI payment and the basic necessities. Now, what happens if for some reason you are unable to meet your EMI payments?

Protection to lenders-

Each time a Bank issues a loan, there is always the possibility that you may default your payments. In order to protect the lender from such problems, there is a legislation called SARFAESI (Securitization and Reconstruction of Financial Assets and Enforcement of Security Interests Act). By this, the lender can seize and sell the mortgaged property to get the full payment of the loan given.

Generally banks do not want to get into a legal hassle and hence ignore the first slip with just a reminder. If you default on your EMI payment thrice, then the bank sends a notice to the person, demanding the payment as soon as possible.

Not only does defaulting on your loan get you into a legal hassle, but there is also the issue that your credibility for any financial help in the future is also tainted. The amount calculated on your EMI calculators should be paid to the lenders or else there can be bad results.

What can you do?

The question comes to what can be done in order to avoid such a scenario. There are different reasons for any individual to default on his loan payments. Here are some steps that you can take:

• Restructuring of Loan:

If you are unable to pay your loans due to some temporary issue such as a sudden job loss, illness due to an accident, etc then you can take the necessary documents and show the banks that the reason for your default was a temporary one. This shows your credibility as a borrower to the banks and helps in convincing them about your ability to pay the loan.

• Part Payment:

Sometimes either the EMI increases due to interest rate increase or it may happen that your income level has fallen, both of which leads to the increase in the EMI payment. It may prove to be difficult for you to pay the loan. In such matters, one can approach the bank and extend the loan tenure, allowing the EMI to fall. For those who are nearing their retirement, this option is unlikely.

• Liquidating your Investment:

At times, you may face the problem of not having regular cash flow while having sufficient investments in the banks to pay your loan. In such a scenario, one can liquidate his assets to pay his EMI.

• Disposing of the Property:

If there is no other option that you have, then disposing of the property is the last measure that can be taken. For this, you need to sit down with the bank officials and discuss the sale of the property. The sale of the property should be taken up such that the maximum price can be availed.

First things first, whenever you take a loan, make sure you have the necessary financial ability to meet your loan payments. Plan your budget by using EMI calculators, as the main aim should be to not default on your payment. If in case you do, look at your options and approach the lenders, together you can find a solution.

The post Default on your EMI, what happens next? appeared first on LoanKuber Blog.