Not being able to make timely payments on home loans leads to defaulting on the loan. Defaulting a loan increases your debt due to the penalty fee appended to the loans. There are several reasons why you could have missed the loan payment, such as skipping the due date, unfavourable payment terms, unprecedented emergencies, lack of loan planning beforehand.

Missing out on your loan EMI payments lead to a decline in your credit score, and also not buying a house with bad credit, making it difficult for you to secure another loan in the future. 

How to Avoid Defaulting on Your Loans?

Evaluate Multiple Loan Options

Check for the lenders who offer the most competitive interest rates along with lower miscellaneous charges. Using trusted home loan EMI and affordability calculators from established lenders like PNB Housing home loans will help you evaluate if the loan fits your bill comfortably. Researching online and talking to the lender will help you arrive at the best options with different lenders. 

The key parameters you need to consider are:

• Interest Rates
• Processing Fees
• Loan Tenure
• Prepayment Charges
• Down Payment Amount
• Eligibility Criteria
• Loan Amount Eligible 
• Terms and Conditions
• Home Loan Balance Transfer Charges

Having a checklist of the above parameters will help you choose the best offer in the market.

If you have already availed of a loan, then you could opt for a home loan balance transfer to a lender who offers lower interest rates for the balance amount on the loan.

Planning Your Loan Amount

Firstly, if you haven’t yet availed of the loan, you will need to plan your loan before applying. Understand your budget allotted towards the loan and use a home loan EMI calculator. Calculate your EMI payout to the lender before you avail the loan to be assured that it won’t stress your budget. Calculate all your income sources and emergency funds to arrive at an EMI that meets your budget comfortably, and then fill in your loan application form.

Do Not Over-borrow

Understanding your requirement will help you borrow the exact amount of loan required. It will minimise over borrowing the loan more than your requirement. Though the homework is cumbersome, it saves a lot of energy in the future. Plan your budget and borrow your exact requirement to save on your interest rates.

Know Your Dates

Getting to know your EMI dates and availing of the auto-debit feature with your lender will save you from the hassle of remembering to pay your loans on time. Check if the amount is auto-debited, or talk to your lender in case of discrepancies in your payments to avoid late payment penalties. Ensure adequate balance in your bank account by planning savings well in advance so that salary delays won’t hinder the EMI debits. Most lenders do not charge any prepayment fees for home loans in case of floating interest rates.  Hence, prepaying your loans well in advance when your finances improve will reduce interest rates and the loan amount.

Planning the above parameters in mind will help you save on loan defaulting charges and repay your loans on time. If you think you will miss out on the months’ payments due to a lack of reserves, then talk to your lender well in advance about the temporary hardship.

The home loan interest rates in India start from 7% and are at an all-time low now. Hence, this is your best time to apply for a home loan or a home loan balance transfer in case of an existing loan. Evaluating such options will help you work around the repayment issues smoothly.