The Can and Cannot for the Banks in Case of Home Loans
Dec 22, 2017 Home Loan
Getting a home loan is a tedious process. The borrowers often get confused which led to numerous questions juggling in their mind. Such as what if they fail to pay the EMI? Can the banks increase interest rates? Will the bank charge extra if the borrower switches from fixed rate to floating home loan rate? And there are many more queries that keep on coming. But you as a borrower should know that the banks or the financial institutions cannot or can do certain things. So what are they?
•When interest rates fluctuate, the borrowers can switch from fixed to floating home loan rate. But banks are liable to charge a processing fee as well as other charges.
•When the interest rate falls, banks can change the tenure of the loan rather than changing the equated monthly instalment (EMI).
•When the banks lower down the base rate, banks can leave the home loan interest rates as it is to the existing loan borrowers by altering the spread. Spread refers to the difference between the interest rate charged to the borrowers and the base rate. For instance, if the base rate falls from the existing rate, then the home loan interest rates need not fall if the spread is increased at the same time.
•If the borrower fails to pay the EMI for more than 90 days, banks can consider the home loan as a non performing asset. The bank might ask the borrower to repay the entire home loan amount. But if the borrower continuously fails to pay the EMI then the banks can claim your assets. As per the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interests Act, if the borrower becomes a defaulter then the banks can take the ownership of the borrower’s asset and sell it off. But banks do not exercise this right, as often as they prefer to recover the home loan amount.
•A bank cannot take the entire amount that they get from selling your house, even if they have taken the possession of the house. If the amount that the banks receive after selling exceeds the amount that the borrower owes to the bank, then the banks are liable to pay the gains from the sale proceeds to the borrower. But if the bank gets a lesser amount from what the borrower owes to the bank then the borrower is expected to pay the remaining amount.
•If the borrower fails to repay the home loan, banks have the right to report the same. And with this, your credit history will get suffer and it will become more difficult for the borrower to obtain a home loan further.
•In many cases, when the bank wants to seize borrower’s assets then the borrower can avoid this situation from taking place by paying off the remaining amount or discussing with the bank about some other way that is acceptable by the borrower.
•When interest rates fluctuate, the borrowers can switch from fixed to floating home loan rate. But banks are liable to charge a processing fee as well as other charges.
•When the interest rate falls, banks can change the tenure of the loan rather than changing the equated monthly instalment (EMI).
•When the banks lower down the base rate, banks can leave the home loan interest rates as it is to the existing loan borrowers by altering the spread. Spread refers to the difference between the interest rate charged to the borrowers and the base rate. For instance, if the base rate falls from the existing rate, then the home loan interest rates need not fall if the spread is increased at the same time.
•If the borrower fails to pay the EMI for more than 90 days, banks can consider the home loan as a non performing asset. The bank might ask the borrower to repay the entire home loan amount. But if the borrower continuously fails to pay the EMI then the banks can claim your assets. As per the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interests Act, if the borrower becomes a defaulter then the banks can take the ownership of the borrower’s asset and sell it off. But banks do not exercise this right, as often as they prefer to recover the home loan amount.
•A bank cannot take the entire amount that they get from selling your house, even if they have taken the possession of the house. If the amount that the banks receive after selling exceeds the amount that the borrower owes to the bank, then the banks are liable to pay the gains from the sale proceeds to the borrower. But if the bank gets a lesser amount from what the borrower owes to the bank then the borrower is expected to pay the remaining amount.
•If the borrower fails to repay the home loan, banks have the right to report the same. And with this, your credit history will get suffer and it will become more difficult for the borrower to obtain a home loan further.
•In many cases, when the bank wants to seize borrower’s assets then the borrower can avoid this situation from taking place by paying off the remaining amount or discussing with the bank about some other way that is acceptable by the borrower.
Looking for property portal?
Related Articles
-
Time taken by Banks to Process the Home Loan
Apr 24, 2019 -
-
-
Is it Possible to Pull Out from A Joint Home Loan?
Mar 28, 2019
See comments (0)
Write a comment
