What Happens When You Default On A Home Loan EMI?

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Home Loan is one of the most important set of loans that could have a significant impact on your Cibil Credit Score. It is also one of the most painful loans to pay as the EMI is high and the loan has to be paid for several years at a stretch.

What Happens When you Default On A Home Loan EMI?
When you have a home loan of 10, 15, 20 and 25 years, it's quite possible that you could default in payment sometimes, if there is any sudden cash emergency that arises. But, remember that it is best to somehow manage to pay this equated monthly installment (EMI) and here is why.

An impact on your CIBIL score

Homes loans tend to have a big impact on your CIBIL credit score. Read more on factors affecting CIBIL credit score

A few defaults in a short span of time and you could be in trouble with your credit rating. A harsh comment from the Credit Information Bureau of India Limited (CIBIL) and you might have problems securing a loan in the future.

So, it is best to pay all of the EMIs on the scheduled date.

Read how to calculate EMI

Penalties

Delay in payment attracts a hefty interest rate and this can go to as high as 24 per cent per annum. Of course, the more you delay and you suddenly realize that the payments have gone exceptionally high.
In such cases it is best to talk to your banker and explain to him the dire emergencies that have suddenly cropped out.

Difficulty in getting loans

A bad credit score means you may find future loans and credit cards difficult to come by, when it is needed. It take several years of regular payments to repair a damaged credit score. It is therefore best to ensure that you make payment of your home loan EMI on time.

Conclusion

While it is difficult to say by how many points your credit score could get hurt, it could easily be in the range of 50-100 points for a few EMIs that are delayed.

It could even get worse depending on the changes that CIBIL makes.

GoodReturns.in

Read more about: home loan, emi, cibil score
Story first published: Monday, August 10, 2015, 9:05 [IST]
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