Lost your job due to Covid 19? Here's how to pay your home loan EMIs

10 दिसम्बर 2021

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Home loans are typically of high value and result in fixed obligations for long period of time in the form of EMI payments. For many individuals, a significant chunk of the monthly salary goes towards a home loan EMI . Losing one’s job can, thus, be quite problematic and stressful.

The COVID 19 pandemic left many individuals unemployed. The pandemic forced a number of companies to shut down or reduce their operational costs to the bare minimum in order to survive. This reduction in operational costs further decreased the income of the employee and as a result, households experienced a decline in their monthly inflow of cash.

The apex bank of India, RBI, permitted all banks to grant a three-month moratorium period on all their assets. This gave relief to a lot of debtors. However, there were many who could not secure a job in those three months or gather enough money to meet their subsequent home loan EMI payments. This left many worried about how they would afford their home loan EMIs in the absence of an income. In this article, we will address this important concern and offer a few solutions.

How to make home loan EMI payments if you have lost your job due to COVID 19?

Here are some tips that will show you how you can still manage to pay for your even if you have lost your job due to COVID 19.

Inform the lender

The very first thing you need to do to is inform your lender about your situation. Never skip the lender’s calls and communication.

Utilise your severance packages

If your employer has asked you to leave, they might have given you two to three months of salary in the form of a severance package. You can make use of this severance package to pay your home loan EMIs. This way, you can keep your payments on track and maintain good records with the lender.

Make use of your FDs (Fixed Deposits) and RDs (Recurring Deposits)

Parking funds in fixed deposits and recurring deposits is one of the most traditional forms of saving your money. If you too have saved your money in the form of a fixed deposit or a recurring deposit, this would be a suitable time to make use of fixed deposit savings to pay for your home loan EMIs. These days, you can easily liquidate fixed deposits and recurring deposits online through net banking.

Utilise money from your provident fund account

If you worked in companies that provided the , benefit of a PF , a financial crunch such as a job loss might be a suitable time to withdraw provident fund money. You can use those funds to pay for your home loan EMI. You are allowed to withdraw around 75% of your PF savings or a sum that is equal to your salary of three months by the EPFO. Around 60 million provident fund users were also allowed to take a portion of their accumulated funds from their accounts by the labour ministry in March 2020.

Avail loan against insurance policy

You can use your money back and endowment insurance policies to get a loan. Since these policies have a savings and a life cover component, they are considered as valuable collaterals for a loan. It is important for such policies to acquire a surrender value. The amount sanctioned by the lender is usually 85% to 90% of the surrender value of the insurance policy. You also get to enjoy lower interest rates if you procure a loan against insurance policy that has a surrender value. If you have lost your job, you can take a small personal loan at a reduced rate against your insurance policy and pay your home loan EMIs. This way, you would get enough time to look for another employment opportunity or create at least an alternate source of income.

Ask your friends and relatives for help

You may also want to consider borrowing money from friends or family members to pay for your home loan. Borrowing money from loved ones saves you from paying high rates of interest or late fees to a bank. You may use the borrowed money to make your home loan EMI payments and repay the debt when you find a job and have your finances under control once again.

Mistakes you must avoid

Losing your job can be tough and you might be under a lot of stress. However, here are two big mistakes to avoid when you are unable to pay your home loan EMI.

  • Avoiding contact with the lender

If you have lost your job due to the COVID 19 pandemic, it is better to be transparent with the lender about the situation. Missing out on your home loan EMIs for a prolonged period compels the lender to announce your loan as an NPA (Non-Performing Asset), and charge late payment penalties on your subsequent EMI payments. This makes it quite difficult and complicated to get your EMI payments and CIBIL score back on track. Thus, do not avoid contacting the lender to discuss the issues you face with your EMI payments. Instead, talk to them and figure out a solution to get your finances back on track as quickly as possible.

  • Say no to jobs that do not give you a hike in salary

It is quite natural for us to only accept a new job if it pays more than our previous employment. However, during the COVID 19 pandemic when the entire job market is unstable, it is illogical to not accept employment opportunities that pay the same salary as your previous job. Thus, if have any debt like a home loan that requires you to regularly pay a significant amount of EMI, it is better to accept any employment opportunity that helps you repay your debt on time. You can always switch jobs after the market has stabilised. You can also continue to look for jobs that provide you with a better salary while being employed at a lower-paying job. At least this way you do not default and make things complicated for yourself in the long run.

Conclusion

Home loans typically have a tenure that can extend anywhere upto 30 years. Thus, it is always better to calculate home loan EMI dues before starting your application process. This can be easily done using an online EMI calculator. The EMI calculator can be easily found on the lender’s website and is free to use. It is also important to remember that you should not take a home loan for an amount that is higher than what you require. The maximum loan amount sanctioned for your home loan depends on your CIBIL score, age, salary, among a few other factors.

Bank of Baroda offers home loans for buying your dream house or even for renovating your existing living space. You can apply online and track your loan status with ease. Get in touch with us today to learn more.

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