Money problems can happen at any time and on any day. Even if you make a lot of money, bad things like losing your job or getting sick can make it hard to pay your bills, especially if you have EMIs. And if you have to pay back a big amount, like a home loan, it’s even harder to deal with situations like these.
So, here are some smart tips to not default on your SBI Home Loan payments when in financial difficulty.
Use your emergency fund to pay off your EMIs.
For borrowers who have been able to keep an emergency fund of at least six times their regular expenses, including their home loan payments, this fund can be a lifesaver in times of financial trouble. If you don’t pay your EMIs on time, not only will you have to pay interest and fees, but it will also hurt your credit score. For this reason, you should always use your emergency fund to pay off your LIC Home Loan EMIs. When your financial situation gets better, you should put money back into your emergency fund so that it will be ready for any other problems that may come up.
Request for a grace period
When your situation is tight, it can be hard to pay back even loans with low interest rates, like a LIC Home Loan, which has one of the lowest rates in the industry. So, borrowers can ask the lender for extra time to pay. This time period is a short break from paying back a loan that the lender gives if the borrower asks for it in bad situations like losing a job or having a serious illness. During this grace period, the borrower doesn’t have to pay any home loan EMIs. The goal is to give the borrower a chance to get back on their feet financially. Once that’s done in a few months (according to the moratorium), you can start making payments on your home loan again, so you don’t have to wait any longer.
Ask for a longer period of tenure to pay off your SBI Home Loan
No matter what caused your financial problems, they can make it hard to pay your home loan EMIs because they take up a big chunk of your income, even if you have a low home loan interest rate. Since a longer repayment period means smaller monthly payments, it can be smart to let your lender know about your financial situation and ask them to extend the loan repayment period. Then, a longer loan term would help to lower the EMI amount, which could help avoid a loan default in the worst-case scenario.
But keep in mind that extending the length of your home loan will also mean paying more in total interest. Instead, try to pay off your loan early when you have extra money, which will lower the total interest cost of your LIC Home Loan.
Combine all your loans into one
Borrowers with two or more loans are more likely to have trouble making their EMI payments when their finances get bad. When this happens, it can be hard to pay your home loan EMI and other EMIs on time. When things are bad like this, there is a way to get out of having to pay back multiple EMIs with different interest rates and due dates on time and regularly. That is, by choosing the option of debt consolidation, the borrower would only have to pay one EMI at a lower home loan interest rate instead of several at different rates and due dates.
Borrowers who already have a LIC Home Loan can apply for a home loan top-up since the interest rates on top-up loans are usually much lower than those of other loan options like unsecured personal loans. The money from the top-up loan can be used to pay off other, more expensive loans early. Then, the borrower only has to pay the combined EMI for the home loan and the top-up loan instead of multiple EMIs for more expensive loans. But if you’re consolidating multiple loans, you should always use a home loan EMI calculator to figure out what your new expected EMI will be. You should also make sure that the new amount is easy for you to pay back based on the loan term and total loan amount.
Switch for a better deal if possible
SBI Home Loan borrowers who are having trouble paying their current home loan EMIs may find that switching to a different home lender and doing a balance transfer can help them pay less on their EMIs. But before choosing a lender, it’s best to compare them on a number of factors, such as whether their rates are lower than the home loan interest rate or not, the length of time they offer, the fees they charge for processing, prepayment fees, etc. So, switch to the lender who will give you a lower interest rate on the amount you still owe and better terms for paying back the loan. This step would help bring down your EMI amount and give you some relief because you would have to pay back smaller EMIs.
When deciding whether or not to use the LIC Home Loan balance transfer facility, keep in mind that the new lender will probably treat your HLBT request as a new loan application and may charge you fees. So, make sure that transferring a balance saves you a lot of money on interest after you take into account any fees and charges. Also, make sure that the fees and charges don’t end up being more than the benefits of transferring a balance.
Get rid of investments that are low yielding.
When it’s hard for SBI Home Loan borrowers to make their EMI payments, they should also look for low-yielding fixed-income investments that aren’t tied to any important financial goal. Most likely, the long-term returns from these are lower than the long-term returns from other asset classes, such as stocks. Also, the interest earned on such investments is usually much lower than the interest rate on a home loan. So, redeeming these fixed-income investments can help you get out of situations where you are having trouble paying your large home loan EMIs and, more importantly, help you avoid a possible home loan default.
