What If the Home Loan Borrower Dies? : Nowadays, taking a loan has become a common part of our life. Some take a loan to build a house, some for the child’s education, and some in case of medical emergency.
What If the Loan Borrower Dies?
But often people do not think that if the loan taker suddenly dies, what will happen to that loan? Will the family have to pay all the money? Will the bank take possession of the house or property? There are many such questions whose answers are very important to know. So let us explain to you in simple language what happens in the case of different loans.
Credit Card Loan After Death
If you or someone you know has taken a loan using a credit card and unfortunately the cardholder dies, then there is no need to panic. Actually, a credit card loan is an “unsecured loan”, that is, no property or guarantee is kept against it. In such a situation, the bank writes off the outstanding amount in most cases and does not recover anything from the family.
This rule becomes a kind of safety net for the family, especially when a big loss has already been incurred in the house.
Personal Loan Liability : What Happens If the Borrower Dies?
Now let’s talk about personal loan. This is also an unsecured loan, but is slightly different from a credit card loan. If the person taking the personal loan dies, the bank does not have the right to recover its money, but if there is a guarantor of that loan, that is, a person who can take responsibility in his place, then the bank can ask for money from him.
So if you are going to become a guarantor for someone, then take a decision carefully. It is possible that later you will have to repay the entire loan.
What If the Home Loan Borrower Dies?
Home loan is a secured loan. This means that the house that has been bought in exchange for the loan is mortgaged. Now if the person taking the loan dies and there is a co-applicant associated with that loan, such as wife, son or daughter, then the responsibility of repaying the loan will be his.
If there is no co-applicant or he cannot pay the amount, then the bank can auction that property under SARFAESI Act. That means the house will be lost.
Loan Insurance is A Smart Deal
Nowadays many banks also provide the option of loan insurance while giving loans. This means that if the loan taker dies, then the insurance company compensates for the entire loan. This neither puts a burden on the family nor does the bank suffer a loss.
While taking a loan, people often shy away from taking this insurance so that some money can be saved, but later this mistake can prove to be costly.
Things to Keep in Mind Before Taking a Loan
Just looking at the EMI and interest rates before taking a loan is not enough. Some other important things should also be kept in mind:
- Is there insurance with the loan?
- Are you becoming a guarantor for someone?
- If there is a co-applicant, is he ready to take responsibility?
Is the loan secured or unsecured? - Does your family have complete information about that loan or not?
By taking care of these things, you can not only protect yourself, but also save your family from unknown financial burden.
Look, there is nothing wrong in taking a loan, but it is very important to understand the responsibilities associated with it. No one knows when life will take a turn. Therefore, before taking a loan, keep in mind the safety of yourself and your family. If possible, take loan insurance and always maintain transparency.
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