Home Loan: If you miss three consecutive EMIs, you'll become a defaulter. Find out what the bank can do to you!

Repaying a home loan isn't easy, especially when the EMIs are high and expenses mount. Sometimes, unexpected circumstances arise, leading to a missed EMI or two. However, if this continues for three months, the matter becomes serious, as the bank declares you a defaulter and initiates action against you. Learn about the steps the bank takes after three consecutive EMIs bounce, and how you can avoid this predicament.

If you've missed your first EMI, there's no need to panic. The bank ignores it, considering it a customer mistake or oversight. In such cases, it usually sends a reminder to ensure the next EMI is paid on time. However, if this happens repeatedly, the bank becomes alert.

When a second EMI is missed, the bank takes it seriously. Reminders, calls, and emails begin. The bank asks the customer why the payment hasn't been made and how it will be repaid. If you communicate with the bank at this time, the situation may improve.

After three consecutive missed EMIs, the bank declares the loan account as NPA. This means your account is now "non-performing" for the bank. This means you have become a defaulter. This also impacts your CIBIL score and makes it difficult to obtain a new loan in the future.

After becoming NPA, the bank sends you a legal notice. This usually gives you two months to pay the outstanding EMIs or reach a settlement with the bank. If you take action within this time, you can avoid the auction.

If you don't contact the bank or make the payment even after receiving the legal notice, the bank initiates the process of auctioning the property. However, the bank uses this as a last resort, as the auction is time-consuming and expensive.

Before the auction, the bank issues a public notice, which includes the property's reserve price, the auction date, and the time. If you believe the property has been priced too low, you can challenge the auction in court. Overall, after a property is declared NPA, the entire auction process can take six to seven months. During this time, you have several opportunities to find a solution. If you resolve the issue in time, you can save your property from being auctioned.