What happens if I defer my EMI mortgage payment?

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Buying a new home is like a dream come true for many of us. But that dream can turn into a nightmare if you delay paying off your mortgage

A home loan is one of the cheapest and easiest ways to accumulate funds to buy a home. There are many home loan products on the market today, so you can choose the one that best suits your needs. 

A home loan can be like a walk in the park, but paying it off on time requires careful financial planning

EMI home loan repayment delays can affect borrowers in several ways. Below is a list of results and solutions for dealing with late payments on your home loan. Late Penalties and NPA Account 

If you delay repaying your EMIs for three consecutive months, this is considered a minor error. But the problem started when this delay dragged on.

When deferring an IME, the first action any lender typically takes is to impose a penalty ranging from about 1% to 2%/hour on outstanding EMI and incur a minimum amount according to the law. NPA will have a cascading effect on the borrower’s relationship with the lender. 

If the borrower has used other loans from the same lender, these loans may also be labeled as NPAs even though the EMIs have repaid them promptly. 

In the event of a major default, the bank reports this account to the credit bureaus and the NPA is reflected in the borrower’s credit report. This can significantly damage a borrower’s creditworthiness and also reduce their ability to borrow in the future.

Rejection of transfers and new loans 

If you want to transfer your home loan to a bank or other financial institution, the new lender may reject your application due to a history of poor repayments

These borrowers may also find it difficult to get a new loan in other categories like personal loans, car loans, and more. If financial recovery is not possible, you may consider taking serious financial actions such as selling your home and moving into a smaller home or rental property to save money, or you may consider selling your chat lists like gold, cars, etc. 

You can focus on things like borrowing based on your ability to repay, you can take out longer-term loans to keep your EMI lower, and you can take advantage of the hold-up period before you start paying your IME to prepare yourself financially before starting IME. You should also stay in touch with your lender and find a solution.

Depending on your situation, the lender may offer you options such as loan rescheduling, grace period or forbearance, and loan settlement wherein the interest rate is reduced as prescribed to reduce less burden on you.

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