How to Manage Home Loan at Time You Face Financial Crisis

How to Manage Home Loan at Time You Face Financial Crisis

A financial crisis always comes unexpectedly in the form of various reasons; reasons can be plenty - sudden loss of job, accident, divorce, or any other reason. Have you taken a Home Loan? Though buying home is an exciting proposition, it is considered financially challenging too. During distress, you can avoid several expenses and luxuries but what you can’t ignore is the EMIs. It is the one thing that you certainly need to pay otherwise you will fall in a trap of problems. If you are in above situation don’t fret. This post will act as a roadmap to manage your home loan and give some relief during potential financial shock. Read onto this blog and get to know home loan management during crisis.

Here are Things to Do When Crisis Strikes

Below are some tips that you can help you during financial distress. We recommend you to follow them attentively.

Always Better to Inform

It is critically important to inform your lenders about your financial worries. There is a chance that they will reduce EMI and increase the Loan Repayment tenure. You can ask them for a lump sum settlement. Furthermore, you can consult finance advisor and get important tips to maintain your credit score and sort out debt.

  • Approach bank which offers a lower interest rate and better repayment.
  • Evaluate your investments – FDs, mutual funds, stocks, etc. To pay off your banks.
  • If left with nothing, talk to bank officials and tell them the matter.
  • You can sell your property directly rather than getting it sold by the bank.

Plan Your Expenses

When you buy a new home and take a home loan for payment, plan your finances at a very early stage. It will help you avoid the financial crisis which might face during repayment. Manage your credit strategically and spend mind wisely at every stage. In addition, try to save additional amount for your crisis times.

Talk to Financial Advisors

Experts can help you during tough times of money. Consult them and ask for the required help. Since they are experienced in the allied domain; they help maintain your finances, credit score, and debts.

Early Repayment

You have two options to repay, either increase EMI every year or you can do quick repayment to reduce financial burden. This will decrease the principal amount automatically along with lowering the interest burden on you.

Home Loan Insurance

Always take the insurance when you take a home loan. Home Loan Insurance helps you in case of your death or loss of a job.

How Banks React & Tackle Such Situations?

Lenders often have a grace period of maximum 90 days. But what borrowers need is to maintain regular communication with the lender.

  • If borrowers fail to communicate or ignores, the lenders can send a legal notice.
  • In case the borrower fails to pay the EMI for more than 90 days, the entire home loan can be a non-performing asset.
  • The final action lender enforces is to auction the property to recover their dues.

How Borrowers Get Impacted?

When borrowers fail to make the repayment, it becomes harder for them to avail loans in the future. The credit score gets negatively affected, and if the borrowers didn’t negotiate with the banks, he/she may ultimately lose the property.

Are you applying for a home loan? Considering all the tension and constant challenge in the home loan repayment, we’ve gathered certain ways to repay it quickly.

  • Offset the interest you’re paying on the loan. Just link your deposit amount and home loan account. This way, the fund in your deposit account will counterbalance your home loan interest and you become able to repay the home loan in a short period of time.
  • Honeymoon rates are offered by lenders at a cheap interest rate for starting period - 6 months or a year.
  • Additional relief is always the best way to get debt-free in a quick time.

Above steps are quite helpful in repaying home loans more swiftly.

Conclusion

No doubt, a home loan is difficult to manage especially when you’re in financial distress.  But if you follow the aforementioned tips, you can find ease in repaying it. We want to add one thing more, go for a reputed lender like The Lawhorn Mortgage Company for all sorts of loan requirements.