Dev Singhraha
Relocation Expert
You don’t have any control over what will happen in future but at least you can be little prepared. In case of home loans also, you take a home loan to build your future like buying a home. But anything might happen like an accident, business loss or prolonged illness due to which, you might default on paying your home loan EMIs. This can affect your credit score which can further affect your chances of getting any other loan.

Keep an emergency fund: financial experts and planners advice that before you apply for a home loan, you plan an emergency fund that can handle a minimum of six month’s expenses. This might help you to manage cash crunch on a temporary basis. You can also buy a insurance against your loan which can pay up to 3 to 6 months EMI in case of job loss.

Consult your bank: banks are usually not lenient in case you default you home loan EMIs. But if you inform and discuss the situation with them, they might overlook the non-payment of EMIs for a month or two. Although they do consider the lenient approach in rare cases such as if the property does not have a clear title wherein the bank might face problems in repossessing a flat. In some cases, the banks might reduce the EMI and increase the tenure.

Temporary arrangement: in case of a cash crunch, you can break you fixed deposit or take a loan against a security. You can also take a personal loan to handle the cash crunch. Although the personal loan is quite expensive due to its high interest rate but for a short term exercise, getting cash flows in order, you can opt for this option with a certainty of getting funds in near future.

If you can’t pay: if you think or realise that you can’t pay off the loan, then you should think about selling off the property. Even if you are getting a less price for your apartment you should sell it off to at least repay the loan. If you hand over the property to the bank, the latter will auction the property that could take a lot of time to liquidate. And you might get a lesser price for the property as compared to the market rate. In such case, you should inform your bank about your decision of selling of the property so that the bank could grant you 2 to 3 months.
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