Pharma executive has no pill for his home loan trauma

Paying back the loan over a 20-year term would not have been a concern with his steady income and the support of his wife, who, too, was working. “I hoped to pre-close the loan as everything was going fine. In the first 18 months, the EMIs were constant, but then the nightmare began. In mid-2005, I received a statement from the bank that the repayment term of the loan had gone up to 30 years, and that gave me jitters. I had expected to repay the loan comfortably before hitting 50, but now the EMIs seemed to continue beyond 55 years of age. The first thought that hit me was how would I pay the EMIs if I decided to hang my boots at age of 50. And the term could even go up to 40 years!” Singh says.

Singh’s wife settled into family life and took a break from work after the couple had a child in late 2005, thereby curtailing the household income. “I started feeling the pinch as the EMIs would go up every eight months. I started with paying Rs 10,585 per month in January 2004, while today it has gone up to Rs 13,841 per month at 11.5 per cent and the term has increased to 25 years from 20 years,” says Singh.

With added responsibilities, Singh is finding it tough to match up to the aspirational standards he had set for himself. The bank did not do anything to ease his pain either, feels Singh.

“The bank would intimate me about the EMI and the term, but would never suggest me as how I could make a strategy to pre-close my loan. Several times I called up the customer service executives to find out if I could move to fixed interest rate, but they would always say, ‘do that if it suits your needs’. That is not helpful as all customers of the bank are not financial wizards,” complains Singh.

“With prices rising every day, I have cut down on some of my personal expenses. We have to pay Rs 27,000 per year towards the play school fees of my son, Aaryan. My wife has also tightened the household budget, but nothing seems to ease the pain. I want to own a house in Pune, as my parents live there, but now the repayment of this loan is prohibiting me from making any investment,” Singh says.

Though the property price has appreciated to Rs 55 lakh, he is not amused by the nominal gains since in real terms it does not mean much. “I bought this flat to live in. This is home for me. Until I have a plan to relocate to a less expensive city, the price appreciation does not mean much. I can’t even sell this flat to buy a bigger place in a similar locality as that would mean getting into another debt trap,” Singh says with a sad smile.

Tomorrow: A marketing executive in Guwahati is cutting personal expenses to meet spiraling EMIs.