I had purchased a flat in NCR in 2012 under a subvention plan and took a loan of 65 lakh from a bank. I’ve been paying an EMI of 63,000 since 2014. I am neither able to take any tax benefit for this loan nor foresee any imminent possession due to the ongoing insolvency proceedings against the builder. Is there a provision to stop paying EMI till there is some resolution?

—Mridul

It is indeed a difficult position for you and investors who have invested in residential properties where the builder has not been able to give possession. The investors’ hard-earned money is at stake and the house looks like a distant dream. The government has come hard on them but the practical aspect remains that the delivery can take a few years before it can be handed over to the rightful owners.

The investors who have taken a home loan or a subvention scheme have been hit the maximum as there is an interest cost to be serviced and if the investor has been staying on rent, it is a double blow for them. You don’t have an option to stop the EMI as the ownership of the asset is with the investor and the banker only gave you a loan. Hence, how the asset performs in terms of value, whether it goes up or down, the loan providing agency does not have any stake in that. They just want the interest to be serviced and the principal to be paid. The best case for you is to sell the property but getting a buyer in the current market is very difficult. In case of non-payment of EMI, it will lead to negative impact i.e. penal charges, accumulation of interest and even confiscation of property. And not to mention that your creditworthiness and credit rating will go for a toss in such a scenario.

Surya Bhatia is managing partner of Asset Managers. Queries and views at mintmoney@livemint.com

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