What happens if you fail to repay your home loan?
The home loan is usually a big amount for the borrower and the lender that’s why there are many cases in which the borrower has not been able to pay off the loan leading to the taking over of the property by the bank or the financing company and auctioning off the property to get the funds back. The bank declares the home as an NPA (Non-Performing Asset) and follows the standard procedure. Home loan repayment issues are common and they usually arise when the borrower is unable to submit the EMIs due to any financial problem or ignorance in some cases. There is a process that is followed by the banks when the borrower is unable to pay the loan. The Reserve Bank of India has given a six-month legal authorization to the debtors to postpone the payment. If the bank.
Legal Implications and Seizure of Property :
The process starts with the bank sending a reminder to the borrower if two EMIs are missed. When three consecutive EMIs are missed, The bank sends a legal notice about it and it also gives two months for paying the missed EMIs. If the borrower is unable to pay that off then bank the seizure of the property takes place. Within a month, The bank can auction the property. The Banks and Financial Institutions Act of 1993 give the right to banks and financial institutions the right to recover debt.
Remember, The borrowers can clear their dues and stop the bank from selling them off before the auction. The bank is also bound to only take the debt amount from the auction and give the remaining money to the borrower.
Impact on CIBIL/Credit Score:
If you fail to repay your home loan or any of the EMIs in time, Your CIBIL/Credit score will be negatively impacted as the bank constantly informs the concerned authorities. A bad credit score will make it harder for you to get any loan in the future as the banks and financial institutions check the credit score of the borrower before giving the loan. If you don’t want any of this to happen then you should pay all your installments in time.
If you want to avoid all these problems then you should pay all the installments in time. You should check your funds and the worth of your property before applying for a loan. Make sure that the loan amount and the time given are good enough for you and your funds. Make sure that the bank does not declare the home as an NPA. A proper check over your funds will protect you from home loan repayment issues, It will also help you in maintaining a good credit score and make it easier to get other loans. You can also pay the installments by using a personal loan but it has much higher interest rates and it might put you in more financial problems. You can also convince the bank in letting you sell off the property and pay off the loan.
Housing loans have many benefits but if you fail to repay the home loan then you may face many problems.