Unable to pay home loan EMIs in COVID-19 times? Know what you can do

Since the bulk of the middle class in India take loans to buy a house, paying EMIs in times of income uncertainties would be difficult. As per industry experts, one way out is to opt for loan moratorium as available for the borrowers from last March.

Hyderabad: The COVID-19 pandemic has adversely affected the job market. While some of the lucky ones can sail through the current crisis with not much impact on the finances, most of the self-employed and salaried individuals would take a hit due to the impending recession in coming months.

Since the bulk of the middle class in India take loans to buy a house, paying EMIs in times of income uncertainties would be difficult.

As per industry experts, one way out is to opt for loan moratorium as available for the borrowers from last March.

"Home loan borrowers have had the benefit of a moratorium on EMIs for three months of the lockdown, and banks have been given the ability to extend this by another three months. The 6 months’ moratorium provides much-needed flexibility in times of uncertainty and home loan borrowers can also look at restructuring their loans with the bank”, said Prashant Thakur, Director and Head of Research at ANAROCK Property Consultants.

In addition to the six-month moratorium, the banks will also convert the accumulated interest for the moratorium period into a term loan.

This means that the borrower will not have to immediately repay the accumulated interest on the loan once the moratorium ends. Thus, a home loan borrower has got the much-needed flexibility in these troubled times, explained Prashant Thakur.

In case, actual job loss occurs and paying EMIs is not possible, the borrower’s loan account will become a non-performing asset (NPA) and the usual course for the lending bank would be to initiate recovery via repossession, he added.

If housing project gets delayed -

Prashant Thakur says project delays are by no means a new occurrence in the Indian housing market. Under RERA, every registered project must be completed in a certain time frame.

However, given the current circumstances, most state Real Estate Regulatory Authorities (RERAs) have given developers a 6-month extension on their previously committed timelines.

Even if they have enough capital, completion of housing projects may be delayed due to labour shortages.

Prashant Thakur has advised home buyers to take the overall situation into consideration before taking a final call

(ETV Bharat Report)