The thought of being laid off and losing one’s livelihood is enough to make anyone worried, particularly if the termination comes as a complete surprise. The unexpected loss of one’s regular source of income can create a significant obstacle in the way of managing existing debt repayments. This is especially true in the case of housing loan EMIs, which likely comprise the biggest portion of one’s overall debt repayments compared to other financial commitments like a car or personal loan.
So if you, too, have lost your job, here are some effective strategies that can be utilised to deal with your monthly EMIs.
Request the lender to extend the tenure of the housing loan.
A loss of employment results in an end to the flow of income into your household, which almost likely will make it impossible for you to continue making the monthly payments on your existing home loan, even if the interest rate on the home loan is quite low. It is especially possible for difficulties to arise in the event that you did not include these loan repayments or EMIs in your emergency reserve. It is in your best interest to communicate the nature of your current financial situation to your lender and ask for an extension of the loan’s payback term.
This will result in lower monthly instalment payments, which you can check on LIC Home Loan EMI Calculator or HDFC Home Loan EMI Calculator. If the loan was taken out for a longer period of time, the monthly principal and interest payment (EMI) would be lower. This would be beneficial in circumstances where one’s finances are tight and might also assist one avoid defaulting on the loan. You may also use a house loan EMI calculator to check the calculation of the EMI.
It is important to keep in mind that prolonging the term of the loan will result in a higher overall interest payment; therefore, you should make an effort to pay back the loan if you have extra funds in the future in order to lower the overall interest cost.
Make use of your emergency savings.
If you checked HDFC Home Loan EMI Calculator and found out that you still have along tenure and the outstanding amount left to pay, then quickly resort to using your emergency fund if no other option is left.
If you have been diligent about keeping a sufficient emergency fund consisting of at least six times your mandatory and recurring expenses, including home loan EMIs being served by one of the most affordable lenders in the form of home loan interest rates, then this fund may be able to rescue you from a precarious financial situation such as an unexpected loss of employment. Since a single day’s delay in the payment of your EMIs can have a negative impact on both your credit score and your credit report, it would be wise to use the money from your emergency fund to pay off your house loan EMIs until you find a new job. Once your regular income starts coming in again, you should make it a priority to recreate your emergency fund so that it will continue to be sufficient not just for the current but also for potential future emergencies. Also, make sure to use tools like HDFC Home Loan EMI Calculator and LIC Home Loan EMI Calculator to assess how your EMI can change if you make any change in the tenure by requesting the same from a lender.
Request for a grace period
You have the option of requesting a grace period from your lender if you are having trouble making your monthly instalment payments (EMIs). A grace period is a temporary suspension of loan repayments that the lender may grant you in the event that you find yourself in a difficult financial situation as a result of the loss of your job. The borrower will not be required to make any EMI payments during this time period, which is intended to give them time to rehabilitate and find new employment. You will be allowed to resume making payments on your current mortgage as soon as you find a new job and are able to pay your bills. But before accepting your grace period request, the lender may use the LIC Home Loan EMI Calculator to check how your EMI may change after restarting the payment after some time, as the interest component may still be levied during the break, which can increase your EMI.
Proceed with the redemption of investments that produce a low return
When faced with trouble in repaying their EMIs due to job loss, one of the first and most important activities that home loan borrowers can take is to identify their fixed-income assets that are not earmarked for any essential financial goals.
The returns that are created by them are typically, but not always, lower than the returns that are generated by other asset classes such as equities over the long run. Additionally, the returns that are produced as interest from such investments typically tend to be substantially lower when compared to the interest rate that is charged on the interest rate for home loans.
Therefore, redeeming such fixed-income investments can be helpful in getting out of situations in which you are having difficulty repaying your large home loan EMIs, and, more importantly, can assist in assisting in avoiding a possible home loan default. This is because such redemptions allow you to get out of situations in which you are having difficulty repaying your large EMIs. Also, when redeeming your low-return investments to handle EMIs, don’t forget to check LIC Home Loan EMI Calculator to assess how much outstanding amount is left for the loan as per remaining tenure. Accordingly, you can plan how much investment corpus to use towards the loan until your income gets back to normal.
Switch your lender if possible
Homebuyers who are having trouble paying the monthly instalments (EMIs) on their existing house loans may find that switching to another home lender and transferring their balance to that new lender is an effective strategy to lessen the load of their EMI payments. First, check the expected change in EMI by using HDFC Home Loan EMI Calculator. And then, before deciding on a specific lender, it is advisable to evaluate a number of potential lenders using a variety of criteria, such as the interest rates offered, the tenure for which the loan can be taken out, and any applicable processing fees, and so on.