Missing out on a housing loan EMI payment can be frustrating and financially incriminating. While a one-off gap isn’t that big a problem, you should never miss out on multiple payments, or else the lender will ensure that your credit score goes down the drain.
Evaluate the Reasons
Defaulting on a home loan EMI payment is a detrimental course of action, arising out for several reasons. In most cases, individuals end up defaulting if they haven’t activated automatic ECS or loan deduction from the savings account. Manual payments are hard to execute with timeliness, and you might end up forgetting if there is already a lot on your mind.
In case you miss out on a payment or payments due to a financial crisis, it is necessary to deal with the same with the utmost attention. The best approach would be to connect with the bank regarding home loan structuring, EMI lowering, or even tenure extension if possible.
Are there Consequences?
Missing an EMI payment has consequences. For starters, the lender levies hefty late fees on an overdue payment, which is in line with almost 24 percent per annum. Therefore, if you default on a single payment, the lender is expected to charge 2 percent of the existing EMI and add it to the next installment.
In addition to that, consecutive defaults can lower your chances of a balance transfer, provided you consider the same after a few years of continued repayment. Besides, missing out on EMI payments can also impact your CIBIL score negatively. This detrimental hit can impact your chances of getting financial support in the future.
How to Bounce Back?
In case you are looking to bounce back after missing out on one or even twohome loan EMI payments, consider the following options:
- Stop Panicking
Apart from a basic penalty, a single instance of default shouldn’t be considered as a reason to panic. However, you need to ascertain the reason and take precautions accordingly.
- Connect with your Bank
A good way to scale beyond the issues is by connecting with the bank, NBFC, or the concerned lender and conveying the issue in detail. If your reason for defaulting is genuine, the lender can work around the EMIs, offer a grace period of bounce back, or even help you restructure the repayment layout to suit your requirements. However, transparency is important, and you must make the financial institution aware of the problems faced.
- Opt for Financial Counseling
If you have bought a house in haste and finding it hard to manage your finances, it is necessary to seek counseling and plan out the expenses accordingly. Counseling helps you with budgeting, which can align the EMIs with your short term financial goals.
Overdue EMIs are hard to digest, especially if you do not have a history of defaulting. However, if you do end up missing out on a payment or two, consider reading the piece in detail to get an idea about the consequences and the plausible remedies.