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Home Loan EMI:  Missing home loan EMIs can have serious consequences both financially and legally. Nowadays, when most homes are purchased with home loans, missing a home loan EMI can have far-reaching consequences, affecting your financial stability, credit score, and even your homeownership status. Therefore, you must be aware of the consequences if you have missed an EMI payment.

Financial penalties

Missing EMI payments may result in substantial penalties. While it may seem like a small percentage initially, interest can accumulate quickly, increasing the amount due. Borrowers must understand that late payments, regardless of the reason, can result in a significant financial burden.

Impact on your CIBIL score

Many first-time borrowers may not fully comprehend the importance of their CIBIL score. These three-digit numbers (ranging from 300 to 900) reflect your creditworthiness and play a significant role in future borrowing. Missing even one EMI can lower your score, making it more difficult to obtain loans or better interest rates in the future.

There is a risk of seizure at home

Home loans are secured by the property itself, which means that if you repeatedly miss payments, the lender has the legal right to seize and sell your home to recover the outstanding loan balance. Not only will this cause you to lose your home, but it will also add to the emotional and financial stress caused by foreclosure.

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Challenges in debt transfer

If you have missed several payments and are considering transferring your home loan to another lender for better terms, be aware that your chances of approval may be lower. Missed EMIs can mark you as a high-risk borrower, lowering your chances of being approved for a loan transfer.

Legal consequences

Continued failure to pay may result in serious legal action, including lawsuits or wage garnishment. Staying in touch with your lender is very important to avoid this situation. Many lenders are open to discussing payment plans or restructuring options if you reach out early.

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It is critical to stay on top of your EMI payments to avoid financial penalties, harm to your credit score, or even legal repercussions. If you are having difficulty making payments, contact your lender immediately to find a solution. This proactive approach can help you avoid the long-term consequences of being labelled a defaulter.

This article is written with inputs from Atul Monga - CEO and Co-Founder, of BASIC Home Loan