What to do if you can't afford your home loan payment

Owning a home is more of a basic necessity rather than a luxury these days. And at times, life happens. When financial hardship hits or unexpected expenses leave you short at the end of the month, you may have difficulty paying your home loan on time. You may start thinking about your credit score being ruined or having collection agencies start calling you and sending you letters of demand. Don't panic, there are steps you can take to relieve your burden. But know this: you are going to have to adjust and make a few sacrifices.

Will skipping home loan payment make you a loan defaulter?

Usually, banks do not consider you to be a loan defaulter when you skip one loan. However, if you do it for three consecutive times, you will be sent due reminders of the same. Lack of response from your side will make the bank send a legal notice to you. You will then be termed as a loan defaulter.

What happens if you become a loan defaulter?

Once you become a loan defaulter, the bank will start the process of taking over your property. They can arrange an auction to sell your house/flat and recover their due amount. If you want to take any action, you need to take before this auction. Apart from this, your credit score will also be hit hard and you might not be eligible for loans in the future. This can be the worst thing to happen to you.

What are the options in this situation?

Prioritise your home loan payments. If you suspect your next home loan payment may be in jeopardy, the first thing to do is call your lender . This can be embarrassing, but it's a necessary step. Ask for help. Let them know that you are having difficulty and are willing to do whatever is necessary to
stay current on payments and keep your house.  Don’t delay – get in touch with your lender as soon as possible.

1.Take action to cut your costs
Spending some time considering your spending habits will help you see if you can save money anywhere. To help see where you can save cash, have a look at your outgoings in relation to what you have coming in then divide spending into essential and non-essential items.

2.Loan refinancing 
There could be a case where the interest rates have gone up and hence you may not afford the increased loans You can talk to the bank to restructure or refinance your home loan. They can increase the tenure of the loan as a result of which your loan would go down. Though this will result in you paying more, it will be better than losing possession of the property.

3. Liquidating your investments
This will be the final step that you can resort to, if the above options do not work out for you. You can liquidate your existing investments such as deposits or mutual funds to pay the loan. You can also use this amount to make part payment for the loan which will reduce the loan going forward.

Regardless of your situation, the key is to take action as soon as you see an issue on the horizon. By proactively taking action, these steps can help you handle your debt without heading into crisis mode.