After taking a home loan, if you are unable to repay its installments on time, then the bank declares you a loan defaulter. According to the rule, if you do not pay 3 installments continuously, then the bank considers the loan account as NPA and declares the borrower as a defaulter. After the borrower becomes a loan defaulter, the bank starts the process of auctioning the property. However, if you want, you can prevent your property from being auctioned even after becoming a defaulter. Here are the 3 ways that can save you from becoming a loan defaulter and if you have become a defaulter, then it can help prevent your property from being auctioned. The bank itself has given information about these methods.

After default, you have a chance to fix everything
According to SBI, every borrower should avoid default. However, even when you default, you have 6-7 months, during which you can fix the situation and bring things back to normal. In the slides below, know the 3 ways that can help get everything right again even after default.

First way
Ask for a grace period from the bank. Under RBI rules, banks can give you a grace period of 6 months with some terms and conditions. Apart from this, you can also consider restructuring your loan. While restructuring, you can propose to the bank to reduce the EMI at present and give bigger installments (balloon payments) later. If you remain transparent, the bank can also give you new ways to solve the problem.

Second way

The second way is that you can redeem some of your investments or use your PF balance to pay the interim dues and then get back to normal. Although this decision may affect your long-term financial plans, it will help you improve the current situation. You can redeem your savings later.

Third way
The third way is that you can take a loan against your assets like gold, property insurance policies etc. The interest rates on these loans are usually reasonable, as soon as your situation improves, you can repay these loans. This will not only prevent your home loan from defaulting, but your house will also be safe from being taken over by the bank.

Disadvantages of becoming a loan defaulter
According to SBI, home loan default has a long-term impact on your CIBIL score and credit standing, this can make it difficult for you to take a loan in the future. Apart from this, the stress of losing the house or dealing with recovery agents can be very disturbing mentally. In such a situation, it is better to make every possible effort to avoid loan default.

Disclaimer: This content has been sourced and edited from ZEE Business Hindi. While we have made modifications for clarity and presentation, the original content belongs to its respective authors and website. We do not claim ownership of the content.