Are You Unable to Pay Home Loan EMIs? Here's What You Must Do - Home Loan Stories | Kotak Mahindra Bank
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09 JUNE, 2021

You might know that paying your home loan EMI’s on time is of utmost importance. However, there could be situations when you are unable to pay the EMI’s due to unforeseen reasons like loss of job or poor  investment choices. Though there is no alternative to paying your EMIs, you can save yourself from defaulting on your home loan repayment through some ways.

Given below are some ways to repay your home loan during a financial crunch. But before that, let us understand the consequence of not paying the home loan EMIs on time.

Consequences of Failing to Pay Your Home Loan EMI

Here are some consequences of defaulting on your loan payment:

  • Your credit score gets affected
    Failing to repay your home loan first affects your credit score, which is crucial for lenders. Without a good credit score, you will not be able to borrow any money in the future.

  • You could lose your home
    Home loans are secured loans where the lender owns your house until the entire outstanding sum is paid off. Therefore, if you do not pay your EMIs for 3 months, the bank will start sending you reminders to clear the dues. In case you fail to do so, the lender shall send you a legal notice and begin the process of auctioning your home under the SARFAESI Act, 2002. You will be termed as a legal defaulter.

 

Top Ways to Repay Your Home Loan EMIs

Now that you are aware of how defaulting on EMIs can affect you, here are few ways by which you can repay your home loan EMIs.

  • Use existing assets and savings
    One easy way of arranging funds to repay your home loan during an emergency is through selling other assets. These assets can be valuables like gold, jewellery, or a luxury car, electronics, etc. In case you have invested in any long-term avenues like Public Provident Fund or Employee Provident Fund, you can make partial withdrawals. By making a lump sum payment, you can manage the outstanding EMIs as well as reduce the principal amount.

  • Borrow against your assets and investments
    You can get a loan against valuables like gold or even against your long-term investments like mutual funds or life insurance policies. This could prevent you from defaulting on the home loan in the short-term. Moreover, as the situation improves, you can repay the loan against these valuables to get the ownership back, thereby keeping your long-term savings intact.

  • Take help of your emergency fund
    In today’s time, everyone tends to maintain an emergency fund. In the event where you see that you could default on your home loan payments, you must use the emergency fund. Though it is a temporary solution in case you have lost your job or source of income, repayment can keep the lender from seizing your house, and prevent your credit score from taking a dip.

  • Talk to the lender and ask for grace period
    If you really do not have any means to repay your home loan EMIs, then you must contact your lender. You can try to explain your current financial situation and convince them to help you through the tough times. In case you have a good track record of loan repayments, the lender may choose to help you by offering a grace period, lowering the interest rate, reducing the EMI by extending the loan tenure or restructuring the loan as per your financial comfort.   


Due to the severe consequences of failing to repay your home loan, it is best to plan your finances well and avoid such a situation. However, if at any time you do face a situation where your finances do not allow you to pay your EMIs, you can use the above-mentioned tips to avoid defaulting on a home loan.

Disclaimer: This Article is for information purpose only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. Bank make no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Newsletter. The information contained in this Article is sourced from empaneled external experts for the benefit of the customers and it does not constitute legal advice from Kotak. Kotak, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein.

 

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Disclaimer: This Article is for information purpose only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. Bank make no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Newsletter. The information contained in this Article is sourced from empaneled external experts for the benefit of the customers and it does not constitute legal advice from Kotak. Kotak, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein.