Moratorium by HDFC Ltd. on Home Loan Repayment in the Wake of COVID-19
The ongoing Coronavirus or COVID-19 crisis has shaken the entire world. This pandemic has created a health emergency in the world, including India. Not just health, but also the financial situation of individuals and businesses are stressed right now. There is going to be a huge and long impact on the Indian economy.
To mitigate the financial impact on people, the Reserve Bank of India (RBI) has recently announced relief measures for bank customers who are repaying retail loans or credit card bills.
According to its Statement on Developmental and Regulatory Policies on 27th March, 2020, RBI has allowed banks and financial institutions to offer a moratorium period of up to 6 months for all payments (including principal and interest) due between 01.03.2020 to 31.08.2020.
Home loan customers will also be able to get relief under these measures. The accumulated interest and principal on housing loans will be amortized over the entire period of the loan. As a result, there can be an increase in the existing EMIs or an extension of the remaining tenure of the loan.
Customers of HDFC Ltd Home Loan will have the following options:
- To continue paying the existing EMI and extend the tenure
- To increase the EMI amount and keep the tenure same
- To pay the interest accumulated during the moratorium period at the end of 6 months of the moratorium period.
- To continue paying EMIs regularly as before
Customers can opt for the moratorium facility latest by 7th April, 2020, by clicking https://portal.hdfc.com/login.
✅ What is a moratorium on a home loan?
A moratorium on a home loan means the housing loan borrowers can delay the payment of their EMI/Pre-EMI for a limited period as defined by the lending bank. The interest at the applicable rate of interest (fixed by the bank) will continue to accrue on the outstanding loan portion during the moratorium period.
For e.g., if HDFC Ltd. grants a moratorium of 6 months on home loans, and a customer opts for this benefit, then his EMIs for March, April, May, June, July and August 2020 will get suspended.
✅ How does the moratorium scheme of RBI to address the financial stress caused by COVID-19?
As per RBI’s announcement, HDFC Ltd. and other lending institutions have been allowed to provide a repayment moratorium of up to 6 months to their customers, on EMIs/Pre-EMIs due between 01.03.2020 and 31.08.2020. Hence, all housing and other retail loans that were disbursed on or before 29.02.2020 will be eligible for the moratorium. Interest will continue to accrue on the outstanding principal amount during the said moratorium period.
✅ Is the moratorium applicable on principal repayment or interest repayment or on both?
The moratorium is applicable on both principal and interest components on loans paid either through EMIs or Pre-EMIs by customers.
✅ What is the applicable term of the said moratorium?
The moratorium of up to 6 months can be offered by HDFC Ltd and other lenders for all instalments due between 31.03.2020 and 31.08.2020.
✅ Will the bank charge penal interest during the moratorium?
No. No penal interest or late payment charges will be levied by the bank.
✅ Can I continue paying my home loan EMIs/Pre-EMIs as per the previous schedule during the moratorium period?
Yes. A moratorium is an option provided by HDFC Ltd. to its customers who are going through a financial/liquidity crunch during this crisis. Customers who want to carry on with their existing payment schedule can do so.
✅ Can opting for the moratorium facility impact my credit score negatively?
No. The postponement of your home loan EMIs/Pre-EMIs during the moratorium period of 6-months will not affect your credit score in any way. During the said moratorium period, non-receipt of EMIs/Pre-EMIs will not be reported to the credit bureaus as default.
✅ What will be my housing loan tenure after the moratorium is completed?
The customer can opt for an extended tenure or increased EMIs, depending on their choice. You can discuss with the bank regarding all available options.
✅ How can I opt for a moratorium?
You can opt for a moratorium by visiting the bank’s website or clicking the link sent to you by the bank through email & SMS.
✅ What happens if I don’t take any action?
If you don’t take any action, i.e., neither opt-in nor opt-out for the scheme, then the bank does not change your account. The default choice for the customer is opt-out.
✅ At what rate will the bank charge interest during the 3-months moratorium period?
The interest will be charged at the interest rate applicable on your loan.
✅ What if I have already paid my home loan EMI for the March month?
In that case, you will get the moratorium period for the remaining 5 months.
✅ Do I have to apply for each loan separately if I have multiple loans?
Yes, you will have to choose the moratorium option for each loan account separately.