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If you find yourself unable to make your home loan payments, it’s crucial to take proactive steps to address the situation. First and foremost, contact your lender immediately to explain your circumstances and explore potential solutions. Genuine reasons such as loss of employment, serious medical conditions, or short-term financial difficulties may warrant consideration from your lender.

You can present your track record of timely repayments on other loans to demonstrate your commitment to meeting your financial obligations. Based on a thorough evaluation of your credit history and current difficulties, your lender may offer several options to alleviate your financial strain:

a) Grace period: Your lender may grant a temporary moratorium on loan repayments, allowing you some time to recover from your short-term financial setback before resuming payments.

b) Refinancing/Restructuring: Loan restructuring involves adjusting the loan tenure, potentially increasing it to reduce your monthly payments. This option can provide immediate relief by lowering your EMIs.

c) Interest rate reduction: In certain cases, your lender may agree to lower your interest rate, albeit with specific terms and conditions. It’s important to note that interest rate reductions below the published rate grid are uncommon and may only occur under exceptional circumstances, such as loan settlement, which could negatively impact your credit score.

Maintaining open communication with your lender is crucial throughout this process to explore available options and avoid legal repercussions. Additionally, practicing sound financial management, including budgeting and regular saving, can help prevent defaulting on your home loan in the future.

It’s important to be aware that you typically have a 90-day grace period before your loan is classified as a Non-Performing Asset (NPA). If your lender initiates legal action, you still have the opportunity to settle your dues before property auction or appeal to the Debt Recovery Tribunal to halt the process.

Taking proactive steps, maintaining communication with your lender, and exploring available options can help navigate financial difficulties and prevent defaulting on your home loan.

The author is CEO and Co-Founder, Basic Home loan. Views are personal.