A home loan is a long-term loan and due to the large amount, its EMI is also often large. During this period, many times people may face such a situation in which it may be difficult to pay the EMI every month, and in this situation, you can become a loan defaulter. However, the loan defaulter is given many opportunities to fix everything. Even then, if the borrower is unable to manage, then the bank moves towards auctioning the property. Know when you are called a loan defaulter, when the auction comes, and what rights you have in that situation.

Know what the bank does after defaulting on the loan?

According to SBI, if you do not pay two EMIs of the loan, then the bank first sends you a reminder. This is a friendly reminder sent by the bank to the borrower. Meanwhile, the borrower should sit with the bank and resolve the problem quickly.

If 3 installments are missed, the bank considers the loan as NPA. Despite the bank's reminder, if the customer does not make any effort for a solution and the third consecutive installment is also missed, then the bank considers the loan account as NPA and declares the borrower as a defaulter. According to SBI, when you default.

The defaulter gets a chance even after the loan becomes NPA.

After the loan becomes NPA, the bank gives notice of legal action to the home loan defaulter and then gives the borrower up to 2 months to pay the missed EMI. This is a chance given by the bank to the borrower to fix everything. If even during this time the bank does not get a satisfactory response to the legal notice, then the bank goes ahead to auction the property.

A good amount of time is given to save the house from auction.

After the loan becomes NPA, the process of reaching the auction of the property takes about 6-7 months. In the meantime, if you want, you can sit with the bank and find a solution to the problem. In such a situation, there is enough time to save the house from going to auction.

The last option is an auction

Even after giving repeated opportunities to the loan taker from the bank, when no solution is found, the bank takes possession of his property and then auctions it. The loan amount is recovered by auctioning the property.

These rights are available during the auction

Before the sale of the asset, the bank or the financial institution from which you have taken the loan has to issue a notice stating the fair value of the asset. It also needs to mention the reserve price, date, and time of the auction. If the borrower feels that the price of the asset has been kept low, then he can challenge this auction. Apart from this, if you are unable to stop the auction of the asset, then keep an eye on the auction process because you have the right to get the extra amount left after the recovery of the loan. The bank has to return the remaining amount to the creditor.

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