Attention mortgage loan clients! Non-reimbursement of IMEs will have an impact on the Cibil score; penalty and more | Personal finance news
Home prices have fallen due to the economic downturn caused by the pandemic. As a result, many of those with the money bought homes at lower prices. Homes sold like hotcakes, which also led to a high demand for home loans. However, if you have taken out a home loan and are unable to pay the contributions on time, you risk a hefty penalty which can also negatively impact your Cibil score.
What is the Cibil score?
Simply put, a Cibil score is a three-digit number that represents an individual’s credit worthiness. The higher the score, the better your creditworthiness.
What is the impact of non-repayment of credits on your Cibil score?
Failure to repay your monthly mortgage payments on time could negatively impact your Cibil score. Experts suggest that if you miss just one monthly payment, your Cibil score can drop by 50 to 70 points.
How to improve your Cibil score?
You can easily improve your Cibil score by paying your missed monthly payment with the next NDE as well as late fees. Your Cibil score will then slowly improve again.
Other penalties in the event of non-repayment of monthly payments
In addition to having a negative impact on your creditworthiness, non-repayment of monthly payments also results in late fees and penalties. Usually, banks charge 1-2% of your monthly payment as a penalty. In some cases, however, you will also have to pay interest on the overdue amount in addition to the late fee.
What if you can’t pay off your home loans?
If you are unable to repay your home loans due to job loss or other emergencies, you should contact the lending bank or NBFC as soon as possible. Usually the banks will listen to your problem and may extend your repayment period to 90 days.
If you don’t pay back any monthly payments within 90 days, banks can mark your loan as a non-performing NPA asset and then put your house up for sale in accordance with the Bank Sarfaesi Act of 2002.
You can also increase the term of your loan to reduce your monthly payments. However, this will increase the overall interest you will pay the bank in the long run.