Homebuyers may find themselves in a difficult financial situation due to a delayed house project and an absconding builder. However, banks still hold borrowers accountable for paying back their house loans in these situations, and missing EMIs may have long-term effects on creditworthiness.
Builder default and home loan EMI responsibility
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I took out a bank loan for a house and made two years’ worth of pre-EMIs. Now that the builder has fled, the structure is only partially finished. Without checking the property, the bank had already paid out around 90% of the loan balance.
Home loan EMI builder delay and borrower dilemma
Since the bank transformed the pre-EMI into a normal EMI following my marriage last year, I have been unable to make the EMI payments. I am now unable to get a house loan as a consequence. Please suggest a course of action.
Expert’s view on builder default and home loan EMI
Expert’s Advice: It is in the buyer’s best interest to do independent due diligence on the property and the builder before to purchase, even if a bank’s loan approval is initially a reliable sign of a property’s legal title. In the end, the buyer is in charge of confirming the property title, building schedules, and any delays.
Whether you are unable to take ownership of the property because of a legal issue or the builder’s failure has no bearing on your obligation to repay the home loan. For whatever reason, banks are not liable for builders’ delays or defaults.
Missed EMI impact on credit score
To keep your credit score high, you have to have kept up your pre-EMI or EMI payments. Your credit history has suffered as a result of not making EMI payments over the last 12 months. Your capacity to borrow money, whether via a credit card or another kind of loan, may suffer in the long run if you have a bad credit history. Your present inability to get a new house loan is mostly due to this ruined credit record.
It would be challenging to get new credit from any lender until you pay off the past-due EMIs on your current loan since defaults are reported to credit information bureaus. It will take some time for your credit score to rise even after you have paid the bills.
🏠 Builder Default & Home Loan EMI
- Key Issue: Builder default home loan EMI liability
- Bank Position: EMIs must continue despite builder delay
- Risk: Missed EMI impact on credit score
- Reality: Bank cannot stop EMI if builder absconds
- Impact: Home loan credit score impact is long-term
Common inquiries
1. In the event that the builder fails or flees, may a bank suspend my house loan EMI?
No. Your house loan obligation is not suspended nor terminated by a builder’s default. You and the bank, not the builder, are parties to the loan deal. Regardless of the state of construction, EMIs must continue.
2. Does the bank have to pay out the majority of the loan without conducting a thorough inspection?
No, not legally. The homebuyer is ultimately in charge of confirming building progress and builder legitimacy, even if banks adhere to internal procedures.
3. Even if the project is on hold, would missing EMIs still have an impact on my credit score?
Yes. Even if the builder is to blame for the delay, missed EMIs are reported to credit agencies and may seriously harm your credit score.
4. If I have outstanding EMIs on a current house loan, can I still get a new loan?
Very improbable. Until all past-due EMIs are paid and the account is regularized, the majority of lenders will refuse fresh loan applications.
5. How can I make things better right now?
First, pay any outstanding EMIs or work out a restructure or settlement with the bank. In parallel, look at using consumer courts or RERA to pursue legal action against the builder.
⚠️ What Homebuyers Should Do
- Priority: Clear missed EMIs to limit credit damage
- Action: Negotiate restructuring with the bank
- Legal Route: Approach RERA or consumer courts
- Awareness: Home loan EMI builder delay does not stop liability
- Long-term: Credit recovery takes time even after payment
In conclusion
Your ideal house may be delayed by a builder’s default, but your loan obligation is not. Regardless of construction delays or legal problems, banks rigorously interpret house loans as borrower obligations. Long-term credit harm from missing EMIs might make borrowing more difficult or costly in the future. Prioritizing EMI payments, maintaining credit discipline, and taking separate legal action against builders who are in default are all requirements for homebuyers.
Disclaimer
This post does not represent financial or legal advice; it is just meant to be informative. Before making any financial choices, readers are encouraged to speak with a licensed financial counselor, legal professional, or lending organization. The opinions stated are based on standard industry procedures and might change based on specific situations.
