Owning a home has become easier with attractive home loan schemes by banks and other financial institutions. Today everyone can also buy a home that fits into their frame of “Dream Home”, owing to the power of Home Loans. From the lower-income class to the upper-income class, major property buyers take home loans to buy a property of their choice. With the home loan option, property buyers with little saving get substantial financial aid, and people with a dream of a bigger house gets ease to expand their budget. No wonder home loan is considered a boon for property buyers.
But at times this boon turns into a swamp, in which the loan payer gets stuck. Usually, this starts with some unforeseen financial crises which create hurdles in the repayment of loan EMIs. Failure to pay the EMI of the home loan for a month or two makes the borrower a loan defaulter. And when stretched for more than six months, the borrower even loses his/her legal rights on the home.
Indeed, defaulting on home loan EMIs can have serious implications and therefore, must be avoided at all costs. But if you find yourself in a financial crisis, where paying EMI seems next to impossible, you need to manage your EMIs smartly to avoid landing in any legal trouble from the lenders. Here are some of the smart ways to manage home loan EMIs during any financial crisis. If you ever find yourself in any such situation, these ways can help you get out of the crisis while still holding the rights to your home.
Consider Refinancing Options
If you are finding it hard to pay off a particular home loan due to high rates, the best way is to consider refinancing options. By refinancing a home loan, you get a separate loan from another bank to pay off the existing loan. This can lead to a substantial reduction in the interest charged by the existing lender and thus, the EMI. Those under any financial crisis can calculate the amount of money they can pay as EMI and find lenders who would be ready to offer a loan with that much EMI. This will increase the tenure of the home loan but the monthly installment will reduce.
Get Your EMI Reduced
One of the best ways to manage home loan EMIs during any type of financial crisis is to talk to the bank or lender and get the EMI reduced. This is an ideal solution for those who are finding the equated monthly installments too high because of other financial commitments. Most banks and financial institutions understand such situations and come up with feasible options according to the borrower’s financial conditions. They may reduce the EMI and increase the time for the loan repayment. However, the total amount paid by the end of the increased tenure might be higher than the amount paid at the initial rate.
Talk To the Bank To Postpone Your EMI
If you feel that your financial crush is temporary, the best way to manage the EMI in such situations is to set everything clear in front of the bank or lender. You can tell them the duration for which you would be unable to pay the EMI and ask to postpone the EMI for those many months. Be it a job change, temporary unemployment, or loss, postponement in EMI can help keep one of the biggest financial expenditures at bay. This EMI holiday can be availed by paying a small payment deferment penalty.
Go For lump-sum settlements
If you feel that you might not be able to pay the EMI in the future because of impending financial obligations, asking for a lump sum settlement is a feasible option. This requires some money in hand, for which you can consider getting a loan from another bank or financial lender offering a lower rate of interest. By asking for a lump sum settlement, the banks would waive off some charges and amount from the total sum to be paid and you can settle the loan once and for all by paying the settlement money.
Before availing any home loan, it is important to take some preventive measures. Make sure that you take home loan insurance for any type of home loan. These home loan insurance policies help the borrowers in repaying the home loans in case of any financial crisis. Not only does the home loan insurance cover the payment in case of the death of the borrower but also provides a solution in case of any financial crisis.