When home loans are not repaid, banks do not immediately seize their credit. Banks are not prepared to understand the various reasons for non-payment of EMIs, which may include financial crisis, risk, etc. When a borrower comes to the bank with an explanation.
Once the reason has been conveyed by the borrower or it has become clear to the lender, the bank restores the EMI and extends the loan period at the borrower's request. This will help the borrower to pay EMIs on time, and banks will not be required to sell the property. HDFC Bank home loan gives its customers enough flexibility to pay the EMIs within extended limits. Only in the worst cases when the goods are sold by the bank. If the borrower's property is sold within three years of receipt, then the borrower can expect to make a profit on the sale. However, if the property is sold after 3 years, the borrower can take advantage of the tax exemption.
When does a home loan become an NPA?
The bank considers the home loan as a Non-Performance Asset (NPA) where the borrower, within 90 days, is unable to repay the principal interest and interest. When a home loan becomes an NPA, the bank may ask the borrower to repay the full amount of the loan which might also include the home loan processing fee. To repay a mortgage, lenders sell or hold property or mortgaged property on the borrower's property. This is the lending authority mandated under the SARFAESI (Securitization and Reconstruction of Financial Assets and Enforcing of Security Interests Act) to protect their interests.
Procedures by a bank for taking away a consumer's property and discarding it are carried out under the guiding principles of the SARFAES Act. These processes begin when a borrower’s account is considered an NPA if the EMI is not paid by the borrower. In this case, the lenders issue a 60-day notice to the borrower. This notice is usually a reminder to the offender stating the problem of non-payment of EMI for three consecutive months.
A further 30-day notice period must be issued by the bank to sell the property, and the next notice must include details and details of the sale. Later the property is disposed of and the money is recovered.
How can you overcome the stress of a home loan?
To overcome the debt crisis, lenders can negotiate with lenders and resolve it. Lenders can access banks with their previous bank records to repay the loan on time and try to convince them. Lenders can explain the reason for not paying on time for valid reasons such as an accident, financial crisis, or job loss and request a grace period for payment. In some cases, interest rates may rise sharply and may not be able to lend to the borrower.
In such a case, the borrower can ask the lender to repay the mortgage. This will lead to lower EMI but increased working time. If there are other assets with creditors such as fixed deposits or joint venture funds, they can be liquidated and the debt can be repaid. Without all of this, borrowers themselves can sell their property and pay off the money instead of the banks taking it and selling it.
Planning against failure
To avoid automatic payments and financial hardship, home loan lenders need to plan and analyze a few things in advance. Monthly earnings in the form of EMI should not exceed 50% of monthly income. The term of the loan should be as short as possible, as this will result in lower interest rates. Financial management must be done by the borrower by timely and regular EMI payments. Credit points are affected when an EMI payment is lost, affecting the borrower's credit profile.
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