A Home Loan is often perceived as a stepping stone to purchase the house of one’s dreams. However, what many people fail to see is the fact that apart from being a great financial aid, a Home Loan is also a long-term commitment, often lasting anywhere between 10 and 30 years. To put things in perspective, you may have to pay as many as 120 to 360 EMIs towards the repayment of your Home Loan. To get a better idea of the same, you can use a Home Loan EMI Calculator, and assess just how much EMI you would be paying against your desired Home Loan amount.
While you may be completely confident of paying off the EMIs on your Tata Capital Home Loan or PNB Home loan, well on schedule but sometimes life comes in the way, and circumstances may take the wrong turn. In such cases, you may find it difficult to keep up with the arduous repayment schedule and may find yourself missing out on EMI payments.
It is always better to plan ahead. Whether you are facing such a situation, or fear for the same, here’s what you must know.
Home loan Default
As per the home loan agreement, you are liable to pay the lender a fixed sum of money, i.e. your EMI every month. If you fail to do so, you will be considered as a Home loan Defaulter.
Home loan Recovery
In case of a home loan default, the lender can exercise their right to recover the loan amount. Moreover, since it is a secured loan, the lender has the right to seize and even sell off the mortgaged property in case of a default.
However, in order to protect the borrower from any inappropriate behaviour of the lender, the Reserve Bank of India, in conjunction with the Indian Banking Association has laid down a set of guidelines for the lenders to follow under such circumstances.
These rights not only protect you in the times of adversity but also offer you an insight into some of the benefits you are entitled to during such difficult times.
Rights of a Defaulter against the Collection Agents
When you miss out on Tata Capital Home Loan EMI payments (or EMI for any other Home Loan) for over 5 months, even after receiving a notice, your lender may put their collection agents to use. However, this does not mean that you have to succumb to their inappropriate behaviour or collection tactics. You reserve a wide array of rights that you must know when faced with collection agents.
Right to Identify the Agents
To ensure your safety, and that of your family, you can and must ask the recovery agents for proof of identity. The agents should carry an ID authorised by the Indian Institute of Banking and Finance, along with an authorised letter from your lender. If they are missing any of these proofs, you can ask them to leave.
Right to Privacy
You must know that the agents are only authorised to speak with the loan defaulter, and cannot have any interaction with other members of the family unless the defaulter is beyond reach. Besides, the visit of the agents must only be between 7 am and 7 pm.
Right to Courteous Treatment
Regardless of the loan default, as the bank’s customer, you reserve the right to be treated respectfully at all times. The recovery agents cannot use any derisive behaviour verbally or physically and should be polite in their mannerisms. It goes without saying, that the agents are not authorised to threaten you in any way possible.
Rights of a Defaulter against the Bank
Here are the rights that you must be aware of, in case of default on your home loan:
Right to be Served With a Notice
If a borrower fails to pay an EMI for over 90 days, it is the duty of the lender to send a notice for another 60 days. Only if the borrower fails to make any payment towards the home loan in these 60 days, is the lender entitled to take any legal action towards the home loan default.
Right to be Heard
In the first 90 days of not being able to pay the EMI, and within 60 days of the notice period. If you wish to reach out to the lender to discuss your situation, and present your case, the lender is obliged to revert to the same, within a span of 7 days. If the lender rejects your application for payment at a future point in time, they must do so with a valid argument.
Right to Fair Value
If you are unable to repay the loan in any way, and the bank ends up seizing your property, you have the complete say in deciding the value of the property. If the lender values the property at a lower price than you deem fit, you can raise an objection against the same. Moreover, you can even go as far as bringing a prospective buyer to the lender if you are sure that the buyer brings in a valuable deal to the table.
Right to the Balance Amount
There are instances where the lender is unable to find an upfront buyer for the seized property. In such cases, the property is sold off through an auction. In case, the amount recovered from the auction is greater than what you owe to the bank, you are entitled to receive the balance amount.
Tips to Come Clean in face of a Loan Default
Yes, a loan default is something that will be extremely difficult to face, and even more tricky to get rid off from your credit report. However, it doesn’t imply that you have reached the tipping point. Even at this stage, there are certain measures that you can take to safeguard your beloved home.
These include –
- Contacting your lender, and placing a request for an extension on the notice period.
- Staying in touch with our lender, rather than avoiding their calls.
- Requesting for a one-time settlement, wherein you will only be required to pay the principal amount and not the interest. Of course, this detail will be stated on your credit report.
- Asking for a loan restructure, wherein your tenure is increased so that your EMIs are brought down significantly enabling you to pay them efficiently.
We hope that you are now aware of all your rights as a home loan defaulter, and are armed to deal with the situation efficiently if it ever comes to that.