Not Able To Pay Home Loan EMI? 6 Things You Can Do, 1 Thing You Should Avoid

The ongoing pandemic has resulted in an increase in unemployment and become a matter of concern since the businesses are shutting down and offices laying off their workers to offload their growing operational expenses. 

This situation left many people in a tizzy, especially those with home loans before the pandemic. 

The non-payment of the equated monthly instalments (EMIs) would mostly result in lenders confiscating the property against which the loan has been availed.

So, if you have a long tenure home loan running in your name and you are finding it difficult to repay your loans owing to less or no payouts due to the coronavirus pandemic.

Let’s go through some methods to ease the burden of loan repayment.

1. Severance Pay

While laying off, many organizations pay severance to their employees which is equal to the salary of their notice period. 

So instead of squandering this money on frivolous expenses, this money can be utilized in the payment of the EMIs.

2. Make Use Of Moratorium offered

According to a recent circular issued by the Reserve Bank of India,  they asked the lending institutions the privilege to allow their borrowers or debtors a three-month moratorium period during the ongoing coronavirus pandemic. 

This moratorium is offered to all kinds of loans including home loans.

So, you will not be labelled as a defaulter if you repay the instalments on your loans post this period. 

3. Make Use Of Your Provident Fund

As we know that we have a part of your earnings getting accumulated in your employees’ provident fund (EPF) account. 

So you can also withdraw the money from EPF and pay off your home loan. 

Government regulations have permitted withdrawal of up to 75 per cent of the savings or up to three months’ basic salary along with dearness allowance from your EPF account. 

4. Liquidate Your Investments

This is the time when you can make use of your savings and fixed deposits. You can consider it to repay your loan. 

Instead of spending your entire savings, take out only that much amount that you would need to repay your loan instalments till you get your next job.

5. Avoid Use Of Your Insurance Policy

If you had bought any insurance policy in the past then you can avail of a loan against the policy that you have.

In this case, the loan would be secured with the policy serving as the collateral, the interest rates on the loan would be much lower than unsecured personal loans. 

Apart from that, the insurance company will grant quick approval and disbursal of the loan amount as you are already their existing customer.

6. Make Use Of Your Mature Mutual Funds

If you have any mutual fund which is matured and is now valued at a price higher than the invested amount? 

Then, it makes sense to redeem the investments to repay your loan. 

Here remember that assets must be allowed to grow at their own pace.

But, it is a thumb rule to get rid of debts and loans first as the mounting liability negates the effect of the interest and profits earned on assets.

7. Borrow From Friends And Family

Last but not the least, during such a crisis, you can also consider borrowing from your friends and family members. 

Consider it as taking out a loan without any interest added given you explain to them why you need the money, and they will be most willing to.