Ask any salaried person what they fear the most, and they’ll say, ‘losing my job.’ A global pandemic has shown us that layoffs are an inevitable vice of the corporate world in times of crisis.
If you lose your job, it will come with many unforeseen challenges, especially if you are in the process of repaying a home loan. Generally, home loans are taken in large amounts resulting in hefty EMIs. While these EMIs are manageable with a steady job, they can prove to be a significant burden on you in the absence of one.
Worried that the numbers on your home loan EMI calculator will increase beyond your reach? Read these six simple ways to pay off your home loan EMIs even without a job.
1. Utilise your moratorium period
As per RBI guidelines, a lender can offer you two to three months of a moratorium, depending on your home loan eligibility parameters like the credit score. It allows you to postpone your EMIs without affecting your credit history. In the meantime, you can search for a new job or arrange funds from other sources.
When the EMIs resume, the deferred payments are added to the outstanding loan amount, and the interest is levied on the revised number. Calculate your new EMI values and total interest amount with a housing loan EMI calculator.
2. Take advantage of your severance package
In most companies, employers pay a severance fee to the employee in case of sudden layoffs. Generally, the severance amount is equal to the employee’s salary for the notice period. To avoid penalty charges and additional interest, you can use this amount to pay EMIs for a few months.
3. Dig into your provident fund
In the wake of COVID-19, the government has allowed a non-refundable withdrawal from your PF accounts. As a result, you can borrow three months of basic salary and dearness allowances (DA) or 75% of the PF balance, whichever is less. This amount can help you pay your EMIs until you find an alternate source of income.
4. Avail of a loan against your investments
Your fixed deposits, stocks, insurance policies, and government bonds can play a crucial role in getting you out of this crisis. You can approach financial institutions to pledge these assets as collateral and avail of a loan against them. Although the interest rate against these securities will be higher than home loans, it can compensate for the penalty charges you have to pay in case of a default Remember that a loan against investments is also a financial commitment, so plan your repayment using a loan EMI calculator.
5. Liquidate your assets
Have you been investing in a financial instrument with the goal of accumulating a corpus? This might be the right time to use it as an emergency fund. Tap into your investments like fixed deposits, stocks, mutual funds, gold, etc., and liquidate them to pay off your loan. Yes, you may lose out on some profit. But on the positive side, you won’t have to pay an EMI penalty. Plus, you’ll be able to keep your credit score intact and not worry about your home loan eligibility in the future.
6. Borrow from your friends and family
Sometimes, asking your loved ones for financial help could be the best option. Borrowing money from people you know and trust can help reduce the stress of arranging money for your EMI payments. You won’t have to worry about paying interest or penalties, and you can return the borrowed amount however you want.
A word of advice
Prevention is better than cure. So, before you apply, assess your home loan eligibility adequately. Use a home loan eligibility calculator to estimate a home loan amount that you can repay comfortably through affordable EMIs.
A home loan eligibility calculator asks for various inputs like age, minimum salary, monthly obligations, and interest rate to estimate your total loan amount. It considers every situation from best to worst-case scenarios. This way, you can prepare yourself for any unexpected challenges during your home loan repayment tenure. Many financial institutions, such as Tata Capital, have an online home loan EMI calculator and a home loan eligibility calculator to help you with the process.
Also, many borrowers hide situations like a job loss or a pay cut from their lenders, fearing legal actions. Don’t make this mistake. Instead, inform the lenders of your situation in time. In most cases, lenders will reassess your repayment capacity and revise your repayment tenure accordingly.
Finally, the most important resolution is to stay calm. Understand and assess your situation objectively and use any of the ways given above to strive forward in these uncertain times. Rest assured that these circumstances will not last long if you take the appropriate steps.