Introduction: Has Your Home Loan EMI Bounced?

By Bajaj Finserv
About: Arwind Sharma is a financial advisor with an experience of more than 7 years. He has worked for topmost financial firms in India and has been a visiting faculty at many reputed institutes in India. Currently …

You managed to secure a loan at the lowest Home Loan interest rates available. Everything seems fine up until the point your EMI payments bounce. Before you start worrying, let’s look at the consequences for your missed payments and what can you do to resolve the issue.

Most probably, your post dated cheques or ECS payments to the bank towards EMI bounced because you didn't have enough funds in your account to cover the home loan EMI amount.

This will result in cheque bounce or ECS bounce charges and missed payment charges. The bank will send you a notice regarding the missed payments and ask you to pay the pending amounts immediately.

Other Consequences of Home Loan EMI Bounce

Whether PDC or ECS, any missed payment on a loan is a negative mark on you as a debtor. However, banks do not take serious action on missed payments until you reach a 90 day period from your last EMI payment. In fact many NBFCs provide a 3-month holiday on EMIs for their customers.

After that, the lender will send you a notice warning of possible legal action, or even repossession of your home to recover the full debt if you don't clear the pending payments soon. Your CIBIL credit score would also be affected by missed EMI payments, making it difficult for you to get other loans.

How to Resolve the Issue

If your reason for missing payments is as simple as a delay in the deposit of your salary by your employer, you can set about clearing the dues as soon as possible.

Keep a Record of Your Payment

Do not depend on ECS to do this, issue a cheque or log on to the website and do a funds transfer to the Home Loan account for the pending amount including penalties.

Transfer the Home Loan

If your current lender is not willing to give you any breathing space, try and find another bank or NBFC willing to do so. Find one offering the lowest Home Loan interest rates. Transfer your Home Loan to the new lender so that you can get a reprieve till you get back on your feet.

However, switching your loan can cost you a significant amount. You current bank will charge you foreclosure penalties, you would have to pay processing fees and other charges when you get the loan from the new lender. Factor in all these and if you feel that you can still benefit from the transfer, then go ahead.