Lost your job? Here's how you can rework your loan EMIs
Posted by: Arti Bhargava on Dec 24, 2018, 10.52 PM IST
IT professional Amit Bakshi took a Rs 50 lakh home loan in 2010 to buy a two-bedroom flat. He earned well and had no problems paying the home loan EMIs all these years. However, he lost his job recently and has defaulted on his last EMI payment. A worried Bakshi has made himself unavailable to his bank as he thinks he will be harassed. Will the bank seize his property if he misses two or three EMIs? How can Bakshi manage his EMIs and keep the property?
Just as Bakshi wants a way out of this situation, it is also not in the bank’s interest to foreclose the loan. Banks are typically more interested in recovering the money than in starting legal proceedings as the process of attaching and auctioning a house is time consuming. So, the bank will be open to negotiations. While the bank will not immediately repossess his house, if Bakshi continues to default for six months, foreclosure formalities could be initiated.
Bakshi’s concern is the very high EMI, which he is unable to pay due to shortage of funds. Though he knows he will find another job, he fears he will have to settle for less pay. He can approach the bank to restructure his loan. For example, if he is paying Rs 10,000 as EMI for 20 years, the bank might offer him an EMI of about Rs 6,000, for 30 years. So his EMI will go down, giving him some breathing room and the bank doesn’t lose money either— it’s a win-win situation for everybody.
Such a restructure may eventually cost him more in terms of total money repaid, but this arrangement will give him the much-needed breathing space, which is his current priority.
Bakshi can also ask for deferral of payments. The bank may grant relief, considering his past payment history and genuineness of the problem. He could also use the funds received as severance package to prepay a part of his loan, which will lower his EMI.
Also, there are debt counselling centres to help him restructure his loan. They would provide him the restructure and refinance options based on his personal cash flow and asset-liability situation. Continuing to remain a defaulter can only sour his relationship with the bank and damage his credit score.