Home Loan EMI Rules: Can the bank take away your house if you do not repay the home loan, if the loan taker knows the rules then it will be beneficial

The Kalamkar News (New Delhi). The Reserve Bank of India had announced the rule of floating interest rate for home loans on 1 October 2019. Most banks consider repo rate as the benchmark for loans. At present it is at its lowest level in the last two decades. In such a situation, borrowers will continue to get the benefit of cheap loans. There will be no change in the EMI of existing home loan holders.

Most of the home loan takers are those whose major part of their income goes in the form of EMI every month. In such a situation, if the main earner of the house becomes unemployed then the difficulties increase considerably. If this happens with you too, then understand that the interest amount gets added to your overall balance every month. 

This will not only increase the tenure of the loan but may also bring many other difficulties. In such a situation, first contact your bank and tell them openly about your situation. 

If your credit history is good and you have paid EMIs regularly, then the bank will definitely give you extension. The bank also reserves the right to extend the tenure of your home loan which will reduce the EMI.

If you miss one or two EMIs, the bank does not take immediate action. If you miss three consecutive EMIs, the bank first issues you a notice.

If the loan borrower does not pay the EMI for six consecutive months, then the bank will give you a grace period of two months for the last time so that you can release the EMI again. 

Even after all these efforts, if the EMI is not deposited, then the bank declares such loan as Loan Performing Asset i.e. NPA. Now the bank can seize your property and proceed with the process of auctioning it.

SARFAESI Act 2002 gives banks the right to auction the properties of loan takers. Through this the bank reduces its NPA burden. For this the bank does not need approval from any court. 

But the bank first tries to somehow restart the EMI. When all options are closed then the bank moves ahead with the process of auctioning any property.

Loan borrowers have a chance to acquire their property till the day the bank announces the auction date. They can stop the auction process by making due payment to the bank. Apart from this, due to the announcement of auction process by the bank, some charges will have to be paid separately.