what happens if I can't repay the home loan

[ramashome]

Hi

I am presently working in a software company in Bangalore, I am paying Rs.8,000/- per month as rent.

I am thinking to invest about 10 to 15 Lakhs from my pocket and planning to take another 15 lakhs from a nationalized bank as home loan to buy an apartment or a small house in Bangalore.

As everybody knows that Private Companies especially Software Companies fire people with a short notice.

What happens if I take a homeloan and after few months or few years I lose my software job in a rescission hit or something, what if I will not get a new job again, then I will not be in a position to repay the Bank Interest for which I have taken the homeloan.

Normally in this situation what happens. Will I be losing all the 10 or 15 Lakh that I invested from my pocket and all the monthly interest that I paid to the Bank?

I asked this question to the Bank official who is dealing with the Home Loan process, he said he don't know.

[msn1270]

while you take the loan, you pledge your home as a guarantee for the loan along with all the original papers.
Also two guarantors will be required.

Once you discontinue the payment of EMI's, there will be a legal process with around 60 days notice time for payment
of dues with penalty + interest for you and also for the two guarantors. Still the EMI's were not paid means, you will be
considered as a defaulter. Bank will automatically become the owner of your asset. They sell the asset at appropriate
time and recover their dues.

[ardesarchitects]

Hi Ramashome,
In the Last recession time banks gave emi holiday ie for some time you are not required to pay emi in case of you lost job.emi holiday option can be opted in many banks depending up on your financial position (bank is the final decision maker ).
If you fail to pay back, they will auction your property .They will Pay you back if at all any remaining money on recovering the loan amount with interests and penalty.
In any case if you loose the job rent out the same property and stay in a smaller house ,there by your burden will come down.

Regards
Ar.Praveen.N
Ardes Architects and Interior Designers
ardesarchitects@gmail.com
www.ardesarchitects.com

[sreekbda]

That is why it is recommended to keep at least 6 months amount of your expenses (inclusing EMIs) for safety.Even if you lose your job, you will have 6 months to find another.

Secondly, don't take very high loan that results in very high EMI. Keep EMI to less than 40% of your monthly income after tax.

[sreekbda]

1 more thing is that if you lose your job and remain jobless for 3 months then you are eligible to withdraw your PF.

[ramashome]

Thanks a lot for replying to my query.

After seeing all your replies I feel like:

This Home Loan sounds lucrative if I buy a 2nd hand home which already has Bank loan on it and which has been lying defaulted for sometime. Looks like In this case the 1st time buyer will be the loser when that property is auctioned by the Bank so the 2nd buyer would get it at cheaper rates.

In that case I would consider buying a house that is already under Bank Loan and defaulted by the 1st Owner(Loan taker).

Where could I enquire about buying such property that already has a bank loan on it and defaulted that is awaiting auction.

[MNRS]

So your actual question is pros and cons of buying a house that is already mortagaed and under default by the 1st Owner ?

[hvc]

So far I have not noticed any bank auctioning properties for small house loan ( 15 to 50 lacs) where borrowers have good credit history. Banks are quite flexible to an extent for such borrowers.
However they are quite rigid with borrowers who has taken loan for business purpose, since the chance getting out of business loss is bleak compared to finding a new job.
Keep a tab daily on new papers. Yesterday a bank published a notice of a borrower who took loan of 22 corers.

[parkom]

Such a situation, where a bank takes away the mortgaged property and disposes it by auction is called foreclosure. There is a website which lists foreclosure properties www.foreclosureIndia.com. I have not interacted with anyone who has bought property through these auctions though.

[pramodn]

My friends have contacted the banks after going through Foreclosureindia website,but some of the properties are sold on"AS IS WHERE IS BASIS" in which case the owner of the property would be staying in the property with tenants if any and you be required to vacate them,as banks don`t take any responsiblity to vacate them.So in my opinion it is better to go for a property which is already in Posession of bank.Check for Posession properties on foreclosure website and enter the auction.it would be safer.