In India, most home buyers rely on a home loan to purchase a home. If you, too, are servicing a long tenure loan, you know the pressure it brings with it. And amidst the responsibility of repaying the loan, what if you lose your job?
Ideally, a home loan borrower should set aside funds for at least six months in an emergency fund. This fund will allow the borrower to continue paying the EMI, even during financial emergencies like job loss. But what if you’ve never maintained an emergency fund? What would you do? Here are some tips to help you stay afloat and repay the EMIs.
- Avail of the moratorium period
As the first step, you should take advantage of the moratorium offered by the Reserve Bank of India. Although you will have to pay the money in the future, your credit history will remain default-free. With the help of the home loan EMI calculator, you can check what you need to pay later.
- Discuss with your lender
Inform the bank or financial organization about your job loss. If you have diligently paid previous EMIs, the lender will consider the same. You can suggest solutions like deferring payment for a few months, prolonging the tenure, or reconsidering the home loan interest rates.
- Use your savings
Almost every Indian family’s savings plan consists of Recurring Deposits (RD) and bank Fixed Deposits (FD). Any investment in these saving schemes can act as a saving grace at this time and help you manage your home loan EMI payments.
- Borrow from friends and family
You can also ask your friends and family. The loan you take from someone known generally doesn’t carry an interest rate. You can return this borrowed amount within the mentioned date.
- Use the severance package
If you have lost your job because of a human or economic calamity, your organization will offer an amount equal to the salary of your notice period. This money is known as severance. Use this money to pay the EMIs so that you do not miss an EMI, and there is no penalty for you to pay in the future.
- Liquidate assets
If you’ve invested in assets like gold or silver in the past, you should liquidate the same now. Keeping the rising gold prices in mind, you can also mortgage jewelry to arrange funds. Moreover, you can apply for a gold loan.
Conclusion
It is often said, “prevention is better than cure.” The saying applies to the financial situation of many. A job loss teaches you the lesson the hard way. Thus, as things return to normal and you have a steady source of income, make sure you build a contingency fund. Using this fund, you can mitigate any financial challenges that may arise in the future.
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