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Update Date : 03-Jan-2023

Created Date : 03-Jan-2023

Category : Home Loan E-Book (Promotional_BT)

This is what happens when you suddenly lose your job and stop paying EMIs

One of the worst fears that is creeping into the minds of many borrowers these days is growing uncertainties around their job stability.

With the way, the world is evolving and technology is taking over, job layoffs have become very common these days.

Irrespective of the qualifications and experience that one is holding, a job scare can be imminent.

Loss of job results in loss of income that directly impacts one’s ability to repay loans.

Non-payment of EMI eventually exposes them to the risk of foreclosure and makes them vulnerable to many other repercussions as well should any such crisis strike.

Hence, every responsible investor must figure out a way to escape this eventuality and stay prepared with some sort of contingency plan should they happen to face such a crisis in the future.

But, before one prepares for it, one must know the impact the non-payment of EMI can have on their finances and life.

Let’s look at some of them.

1. Charges and penalties – Levies in the form of penal interest and charges can badly damage your finances. It accumulates and gets added to your outstanding principal balance which further attracts more interest and keeps compounding.

2. Negative credit reporting – Any positive or negative action reported in your credit behaviour impacts your credit ratings. Defaulting on loan payments especially a home loan pulls down your credit scores drastically. And low CIBIL score further lowers your chances of availing of more loans in the future.

3. Risk of foreclosure – The moment you miss your 3 consecutive EMIs of your home loan, be sure to see your bank collection representative at your doorstep soon.

Banks usually allow you not more than 90 days to clear the outstanding dues. If you still fail to repay, they will foreclose your property to recover their dues.

4. Financial loss – If you stop paying your loan EMIs, your lender will continue to accrue interest on your loan and eventually get them added to the principal outstanding balance. Further, this will result in piling debts as you are now subject to payment of interest on interest also.

Moreover, if the situation worsens and the property had to be sold, it will be a hard blow on your finances as your property will then be sold at a deep discount.

5. Stress – Loss of income, constantly being chased by bank representatives for money, and risk of losing the house will eventually result in a lot of stress and make you more vulnerable to health related problems.

6. Employment issues – These days, many companies have already started checking CIBIL records of all the job applicants before hiring them. They, in turn, judge them by their attitude and their ability to handle the critical aspects of their life like managing their own finances.

It may be possible that your hardships if not managed well may cost you your dream job in the future.