Are you planning to take a home loan? Are you a home loan defaulter? Then you should know some things. If you don't pay the EMI after taking the loan, the interest will increase and if you continue to default, the bank will take further action.

There is no big problem in defaulting on EMI payments in some cases. But if the home loan EMI is not paid for three consecutive months, the bank will take further action.

The bank will send a notice to those who do not pay for three months, considering them as "defaulters". In this case the borrower should immediately approach the bank and explain their problems. The bank is likely to allow some grace period for them if the bank is interested after checking a good credit history and showing genuine reasons. However, if they don't pay, their CIBIL score will drop.

In the event of default, the bank will send a 60-day final notice under SARFESI (Securitization and Reconstruction of Financial Assets and Enforcement of Security Interests Act). The Act empowers banks to auction properties to recover money owed to borrowers. These 60 days will be an opportunity for the loan holder to repay their dues. After that the bank sells their property through auction. The lender will also have a right to the excess amount received through the auction.

In the dire situation of default, loan owners are better off selling their home as soon as possible and repaying the bank.