RK Karmakar, 43, and a marketing executive with an FMCG company, never wanted to take a home loan for constructing the first-floor of his house in the heart of the city. But the lack of proper drainage in the Assam capital reduced his once-posh locality into a water-logged one. So, he had little choice but to go for extension work. He finally approached HDFC for a loan in February 2005. By then, the prices of construction material had already soared much higher than what he had estimated, forcing him to go for a second loan in September 2006.

“Initially, I took a loan of Rs 9.9 lakh, opting for a variable interest rate of 8.25 per cent with an EMI of Rs 8,436. But that hardly lasted about 18-19 months, when the bank enhanced the interest rate to 10.50 per cent,” Karmakar said. And with three revisions since he borrowed, his EMI has jumped from Rs 8,436 to Rs 10,235, sending his plans haywire.

Worse, spiralling prices of construction material compelled Karmakar to go for a second loan of Rs 9 lakh within 18 months of the first loan. “In May 2007, when I went for the second loan, carrying an interest rate of 9.5 per cent, the EMI was Rs 8,390. The rate, however, has jumped in the last two years, and today, I am paying 10.75 per cent, and the EMI has gone up to Rs 9,444,” says Karmakar, who has a family of five, including aged mother and two sons aged seven and two. His wife contributes her bit — a few hundred rupees — to the family income by working in a private preparatory school in the neighbourhood.

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