• Source:JND

A Bengaluru resident who lost his Rs 1.2 crore apartment after missing just three home loan EMIs. The incident was shared on social media by Chartered Accountant Meenal Goel to highlight the financial risks associated with housing loans.

According to Goel, her neighbour had a stable job, a steady income, and had purchased a flat in a prime locality. However, after being laid off in October, he began facing financial stress. By January, he had defaulted on three EMIs, prompting the bank to initiate recovery proceedings under the SARFAESI Act.

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The SARFAESI Act allows banks and financial institutions to recover outstanding loans without seeking court intervention. Within 60 days of issuing a notice, the bank auctioned the property for Rs 95 lakh. From the sale proceeds, the lender recovered Rs 80 lakh in dues, leaving the borrower with only Rs 15 lakh despite having paid EMIs for eight years.

Goel noted that until the final EMI is paid, ownership of a mortgaged property effectively remains with the bank, making borrowers vulnerable to sudden income disruptions.

To explore preventive measures, Goel consulted a banker friend who suggested that borrowers facing financial hardship should approach lenders before defaulting. Banks may consider restructuring loans for customers with strong credit histories, especially in cases of genuine difficulties such as job loss or medical emergencies.

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Other options include extending the loan tenure to reduce monthly EMIs to manageable levels. Financial planners generally recommend that EMIs should not exceed 40 per cent of a borrower’s income. Additionally, individuals may withdraw up to three years’ worth of provident fund contributions in emergencies to meet loan obligations.


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