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What Happens if Home Loan EMI is Missed

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Aakash Jain

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Missing a home loan EMI might seem like a small slip, but it can quickly lead to bigger problems. You may face late fees, damage your credit score, or even risk legal action. What happens if you miss a home loan EMI payment isn’t just about one due date—it can affect your future loans, interest rates, and peace of mind. 

When you understand the real impact, you can act faster, make better choices, and avoid long-term trouble. Ignoring it could cost you more than just one month’s payment—it could harm your financial health for years to come.

What Happens When You Miss a Home Loan EMI

When you miss a home loan EMI, your bank treats it as a payment default and flags it in your loan record. This may not lead to legal action right away, but it can still cause serious problems. Your lender will likely contact you to ask why the payment was missed and expect a quick response. 

What happens when you miss a home loan EMI also depends on your bank’s policy—some may offer support, while others may apply penalties without delay. Even if it's your first missed EMI, your credit score can drop, making future loans more expensive or harder to get.

Immediate Consequences of Missing an EMI

Here are the immediate consequences of missing an EMI that you need to know to avoid bigger financial trouble later:

  • Your bank may charge a late payment fee for the missed EMI

  • You could receive reminder calls, emails, or messages from your lender

  • The missed EMI will be recorded in your loan account as a default

  • Your credit score may drop, even if it’s your first missed payment

  • You might lose access to pre-approved loan offers or credit cards

  • Interest may continue to add up on the unpaid amount

  • Your bank could stop or delay services linked to your account

  • Repeated misses may trigger recovery actions or legal notice

  • What to expect if you miss an EMI payment also depends on your loan terms

  • Some banks report missed EMIs to credit bureaus within days of the due date

Impact on Your CIBIL Score and Credit History

Missing even one EMI can affect your credit score more than you might expect. Every missed payment is reported to credit bureaus and lowers your CIBIL score, which banks use to judge your creditworthiness. A lower score means you may face higher interest rates or even get rejected for future loans or credit cards. 

What if you forget to pay your home loan EMI? You risk damaging your credit history for years, even if you clear the payment later. Lenders see missed EMIs as a sign of risk, and this can limit your financial options when you need them most.

Penalty Charges for Missing an EMI

Here are the common penalty charges you may face if your home loan EMI is missed or delayed:

  • Most banks charge a late payment fee if your EMI is not paid on time

  • This fee is usually a fixed amount or a percentage of the EMI

  • You may also pay additional interest for every day the payment is delayed

  • Charges you may face if your loan EMI bounces include cheque bounce fees and bank penalties

  • A bounced EMI due to insufficient balance may lead to non-maintenance charges from your bank

  • Some lenders may charge multiple penalties if both the EMI and bounce occur together

  • The total cost of missing an EMI increases the longer you delay the payment

  • These charges are usually listed in your loan agreement, so always read the terms carefully

  • Repeated penalties can make your loan more expensive and harder to manage over time

  • Penalty charges are reported to credit bureaus, which may further impact your CIBIL score

Grace Periods and Loan Agreement Terms

If you miss an EMI, you may still have a chance to avoid penalties—but only if your bank offers a grace period. A grace period is a short window of time after the due date when you can make the payment without facing late fees. So, how long is the grace period for EMI payments? 

It usually ranges from 3 to 15 days, depending on your lender and loan type. However, not all banks offer this, and some may start charging interest from day one. Always check your loan agreement to understand the exact terms and avoid any costly surprises.

What to Do If You Have Missed an EMI

Here are the most important steps to take if you have missed an EMI and want to reduce further impact:

  • Contact your bank or lender as soon as you realise the EMI is missed

  • Explain your reason honestly and request time to make the payment

  • Try to pay the missed EMI as quickly as possible to limit penalties

  • Ask your lender if they offer a grace period or partial payment option

  • If you're unsure what to do if you haven’t paid your home loan EMI, seek help from the bank’s customer care

  • Check if your account has been charged any late fee or additional interest

  • Request a one-time waiver on penalties if this is your first missed EMI

  • Review your loan account online to track the updated payment status

  • Avoid ignoring follow-up messages, as this can make the issue worse

  • Keep records of all communication and payments for future reference

Can You Request EMI Deferment or Rescheduling

Yes, you can request EMI deferment or rescheduling if you’re facing financial trouble, but it’s important to know how it works. Many banks offer this option to help borrowers during emergencies like job loss, illness, or a sudden drop in income. You may need to submit documents such as medical bills, job termination letters, or bank statements to support your request. 

If approved, your EMI may be paused for a few months or adjusted to a lower amount with a longer repayment term. This can ease your burden but be aware—you may end up paying more in interest overall. Always ask your bank about the long-term cost and read the new terms before agreeing.

Tips to Help You Avoid Missing EMIs

Here are simple yet effective tips to help you stay on track and avoid missing your EMI payments:

Set Up Auto-debit

Automating your EMI payments ensures they are paid on time, even if you forget the due date.

Use Payment Reminders

Set calendar alerts or mobile notifications a few days before your EMI is due to avoid last-minute issues.

Build an Emergency Fund

Keep at least three months of EMI payments saved to handle income loss or unexpected expenses.

Review Your Monthly Budget

Track your spending regularly to cut non-essential costs and keep enough balance for EMI payments.

Inform Your Bank Early

If you expect payment delays, contact your lender in advance to discuss possible solutions like deferment or rescheduling.

Link Your EMI to a Salary Account

Connecting your loan EMI to your salary account helps ensure timely payments when your income is credited.

Avoid Taking On New Debt

Don’t add extra loan or credit card payments while repaying your home loan unless absolutely necessary.

Choose a Comfortable EMI Amount

Pick an EMI that fits your income and expenses, even if it means a longer repayment period.

Monitor Your Bank Balance Regularly

Check your account balance before the EMI date to avoid failed payments due to insufficient funds.

Use a Loan EMI Calculator

Use a home loan EMI calculator before taking a loan to make sure your monthly amount fits within your budget.

How Many EMIs Can You Miss Before Legal Action Is Taken

Missing one EMI may not trigger legal action, but missing two or more can lead to warning calls and formal notices from your bank. If you miss three consecutive EMIs, your loan might be classified as a non-performing asset (NPA), which allows the bank to begin recovery under the SARFAESI Act. They can then send a legal notice and, if the dues remain unpaid, take control of the property. 

Each lender has its own policy, so always check how many missed payments they permit before starting legal proceedings. Ignoring notices or delaying responses can worsen the situation, so act early to protect your credit and your home.

How to Rebuild Your Credit Score After an EMI Default

Here are the most important steps to rebuild your credit score after missing a home loan EMI and avoid long-term financial damage:

Clear Outstanding Dues

Pay any missed EMIs and related charges as soon as possible to stop further damage to your credit score.

Pay Future EMIs on Time

Make every EMI payment on or before the due date to show lenders that you can manage your credit responsibly.

Pause New Credit Applications

Avoid applying for new loans or credit cards until your credit score shows steady improvement.

Review Your Credit Report

Check your credit report for mistakes or outdated information and report any errors immediately to the credit bureau.

Keep Credit Usage Low

Use only a small part of your available credit limit and avoid maxing out your cards to maintain a healthy score.

Build Emergency Savings

Save a small amount every month to cover future EMIs and prevent another default during a financial emergency.

Conclusion

Missing a home loan EMI is serious, but not the end of the road. By understanding the risks and acting fast, you can prevent long-term financial harm. From extra fees to legal action, the consequences grow with every missed payment. But with the right information, you can stay in control. Knowing what happens if you miss a home loan EMI payment helps you stay prepared and avoid panic. Stay informed, communicate with your lender, and always plan your finances with care.

FAQs on What Happens if Home Loan EMI is Missed

What are the immediate consequences of missing a home loan EMI?

Missing a home loan EMI can lead to late payment charges, added interest, and reminder calls from your lender. More importantly, it’s reported to credit bureaus, which can reduce your credit score. Acting quickly helps limit these consequences and shows lenders that you’re serious about repaying your loan.

Even a single missed EMI is reported to credit agencies and can cause your CIBIL score to drop. A lower score may reduce your chances of loan approvals and could increase your future interest rates. Repeated defaults can damage your credit history for years, making recovery harder.

Yes, most banks apply a late payment fee or a fixed penalty, usually based on the EMI amount or a flat rate. If your EMI bounces due to insufficient funds, you may also incur cheque bounce charges and non-maintenance fees from your bank. These charges can add up if not resolved quickly.

Yes, missing multiple EMIs—usually three or more—can result in your loan being marked as a non-performing asset (NPA). Under the SARFAESI Act, lenders can issue legal notices and take possession of your property if dues remain unpaid. However, most banks offer warnings and time to respond before initiating recovery action.

If you expect to miss an EMI, inform your bank immediately. Many lenders may offer a grace period, part-payment option, or EMI deferment plan if you act early. Ignoring the issue can lead to late fees, legal notices, and long-term credit damage, so communication is key to avoiding financial strain.

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Hi! I’m Aakash Jain
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Aakash is a seasoned marketing and finance professional with over five years of experience. With a unique blend of financial expertise and creative flair, he excels in crafting succinct, user-friendly content that empowers readers to make well-informed choices. Specialising in articles, blogs, and website pages for loan products, Aakash is dedicated to simplifying complex concepts and delivering valuable insights that resonate with diverse audiences.

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