Are you struggling to repay your home loan?

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Purchasing a home in any metro city can be a back-breaking task for any salaried individual and he or she has to take a home loan. Home loans, in contrast to other types of loans, have a more extended repayment period. If you lose your work or have a medical emergency during the loan term, your finances may go out of control.

Here are a few things you can do if you are having trouble paying your house loan EMI payments:

Evaluate circumstances

Find out if the problem is due to a loss of employment or an overestimation of future household income levels. Try to figure out whether or not it’s only a short-term inconvenience. Changes in employment or becoming a two-income family will be required as a result.

Sell your assets

Assuming the worst-case scenario, use must have to use your emergency savings to pay the EMIs. Liquidate your fixed deposits, PPF, and mutual funds as a final option to close the shortfall. However, before doing that, you can also for a grace period of three months while renegotiating your loan. You can even extend the loan term to make it more affordable if that’s an issue.

If you had chosen floating-rate loans, an increase in economic interest rates could have lengthened the time it took you to pay back your debt. Switch to a fixed rate if you can’t take any more increases in interest rates.

Talk to your lender about refinancing

Approach your lender if your financial situation remains precarious. Bring all of your credit repayment history documentation with you. Provide additional collateral, if necessary, in the form of your financial investments.

Ask for a grace period of three months while renegotiating your loan. You can even extend the loan term to make it more affordable if that’s an issue.

If you had chosen floating-rate loans, an increase in economic interest rates could have lengthened the time it took you to pay back your debt. Switch to a fixed rate if you can’t take any more increases in interest rates.

Renegotiation of the Loan Agreement

Consider refinancing the loan with a reduced interest rate or other favourable terms from another lender if these negotiations do not go well. Be sure to account for one-time expenses like penalties and processing fees when you’re budgeting. Also, keep in mind that extending the loan’s length will result in greater interest charges.

Budget that’s as simple as possible

Reduce your household spending to the bare minimum. Make sure you have enough money set aside after paying for the necessities to pay your home loan EMIs. It’s better to default on your auto loan than to lose your home.

Let your home be rented out

The house can be rented out if your neighbourhood has a lot of potential for rental revenue. While you search for a smaller rental home or co-housing choices, utilise the rental money to pay off some of your EMIs.

You should consider selling your home

It’s preferable if you sell the house on your own than if the bank holds an auction. Due to the fact that it’s a last-ditch effort, the latter sale is likely to be undervalued. In contrast, if you inform the bank yourself that you will sell the home on your own, you’re more likely to get a better deal. Proceeds from the sale may be used to settle the existing debt.

However, keep in mind the ramifications in terms of taxes. If you sell your house within five years of taking out the loan, you may have to give up all of your previous Sec 80C tax benefits.

Short-term capital gains tax is imposed at your marginal tax rate if the property is sold within three years after purchase. If you sell your property after three years, you’ll owe a long-term capital gains tax of 20% (plus indexation advantages).