I have taken a home loan from a bank to book an under construction residential house. The flat is still under construction while the builder has absconded. The bank has already disbursed 90% of the amount. I have paid pre-EMI interest till last year when I got married and since then I have not been able to pay the pre-EMI. Now the bank has asked me to pay regular EMI. I tried to get personal loan to pay the EMI but no lender is willing. Can you please suggest what can be done?
Reply by: Balwant Jain, a tax expert
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Whilst the bank’s approval is prima facie a good indicator about the legal title of the property, it is in your interest to carry out your own due diligence of the property and the builder as well before buying it. Basically it is the buyer (i.e. you) who is responsible for checking on the property title or the possibilities of a delay in construction and the risks associated with these.
Your liability to service your home loan is independent of your inability to get possession of the property either due to legal dispute or any fault on the part of the builder. The bank does not take the responsibility for any delay on the part of the builder in construction due to any reason. You should have continued to pay the EMI interest after your marriage in order to maintain good credit rating. By not paying the pre-EMI interest for last one year you have spoiled your credit history.
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Bad credit history has long term impact on your ability to borrow from the credit system be it credit card or any kind of loan. This spoiled credit history is responsible for your inability to get personal loan now. Unless you settle your old home loan there is no chance for you to get any fresh loan from any lender as the default of existing home loan is there in the records of the credit information bureau. Even after settling outstanding home loan EMIs, you will still not be able to get any credit for long time as it will take very long for your spoiled credit history to improve.
