Buying a house or any property for that matter is not a piece of cake. More often than not, a purchase as large as this requires careful planning and a proper payment structure that doesn’t burn holes in your pockets, leaving you dry and cashless. In fact, it’s vital to make sure you pay off your home in the best possible way, without running out of money halfway through and subsequently losing out on your dream home. People make the most of the easy home loans available to buy property and pay for their homes in installments ie EMI (Equalized Monthly Installments). Several banks in India offer quick home loan services that allow you to go ahead and buy a house without too many hiccups and ditches along the way.

So, you bought a house, moved your furniture and started calling it home, but you can’t pay the EMI due to various unforeseen reasons. What will you do next? Well, popular belief states that the financier steps in and takes possession of the house from him. That, however, is not the case. Most financial institutions, depending on the situation and the reason for the suspension of monthly payments, offer a margin of maneuver, giving the client time to recover their finances before continuing to pay the loan amount.

Banks have the power to invoke the Securitization and Reconstruction of Financial Assets and Enforcement of Movable Guarantees Law of 2002 (SARFAESI), which allows them to recover funds from non-performing assets without the intervention of the courts of law. However, most banks prefer to deviate from this route, unless absolutely necessary, giving the customer time to pay. Banks let a mortgage default slip before sending out regular mailings to remind customers of their late payments.

However, the lack of response to these emails during a period of six months will lead the financial institution to tighten the threads more and invoke the SARFAESI Law. “If the borrower does not respond to any of the emails, the bank sends a legal notice through its legal department. After the end of this period, the bank can officially qualify the mortgage loan as NPA and start the recovery process of the property”. through the SARFAESI Law. Finally, five months after the first default, the bank sends a notice, stating that it has appraised the property at a certain amount and that it will auction the house on a certain date, which is usually set in one month. from the date the bank mails you the auction notice,” says VN Kulkarni, senior counselor at the Abhay Credit Counseling Center.

However, banks are willing to connect with customers and better understand their woes. A borrower can also request a moratorium in case of job loss and assure the bank that the EMI will be paid regularly after a period of six months. Additionally, customers can restructure their loan and increase the length of the loan if rising interest rates are a cause of late payments. Lastly, it is vital to maintain a good history and ensure regular EMI payments as a payment history affects the bank’s ability to consider a future loan.

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