Home Loan Default? Be careful before the auction! Learn 3 surefire ways to save your property..

Getting a home loan is easy, but paying EMIs on time can often prove challenging. If you don't pay your installments for three consecutive months, the bank declares your account NPA and categorizes you as a loan defaulter. Following this, the bank can begin the process of auctioning your property. However, the auction process isn't immediate. In the meantime, banks offer several opportunities to prevent your property from being auctioned. Here are three ways the bank itself has suggested.

SBI says – 6-7 months even after default

According to SBI, even if a customer defaults, they have approximately 6-7 months to rectify their situation and normalize their loan. This means there are still ways to prevent your home from being auctioned. All you need to do is take the right steps.

First Method: Ask for a Grace Period or Loan Restructuring

The first method is to ask the bank for a grace period. According to RBI regulations, banks can grant up to six months with certain conditions. If your income has been temporarily affected, you can opt for loan restructuring. You can propose to the bank that the EMI be reduced for the time being and the balance be repaid in larger installments (balloon payments) later. If you explain your situation honestly, the bank is often willing to cooperate.

Second Method: Pay the Dues from Investments or PF Balance
Another method is to use your existing investments or PF balance. If you have fixed deposits, mutual funds, or insurance policies, you can redeem them to provide temporary relief. While this may impact your long-term financial plans, it is a practical way to overcome the current crisis. You can rebuild your savings later.

Third Method: Take a New Loan Against Gold, Property, or Policy
The third method is to take a loan against your assets, such as gold, insurance policies, or other assets. Interest rates on these are generally reasonable, and approval is quick. This allows you to pay off the outstanding EMIs on your existing home loan and prevent the bank from auctioning it. As soon as your financial situation improves, you can repay this new loan.

Disadvantages of Becoming a Loan Defaulter
According to SBI, the impact of a loan default isn't limited to your property.

Your CIBIL score drops.

It becomes difficult to obtain a new loan or credit card in the future.

Dealing with recovery agents can be stressful.

It increases the pressure both mentally and financially.

Therefore, it's best to consider these three methods before or immediately after a default.

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