It’s not just the salaried class that has had to cut corners with ‘endless’ monthly instalments and higher prices. Even professionals — whose incomes are generally not steady and depend on assignments or contracts — have taken a knock, and many have had to compromise on their dreams. Jolly Baruah, an architect, living in the National Capital Region for the last 15 years, finally made some decent savings to make a Rs 2 lakh down payment for a Rs 22 lakh DLF flat in Gurgaon.

To buy her first house in the NCR, Baruah took a Rs 20 lakh loan from ICICI Bank with a 15-year tenure in May 2005 at a floating rate of interest of 7.25 per cent (50-75 basis points lower than the prevailing market rate of about 7.75-8 per cent).

“If you a working professional,” Jolly Baruah says, “banks make it very easy for you to take a loan because they take the original papers for the property. A loan seems like a good idea especially if you do not have lots of money in black and white available”.

By May 2007, she found her EMI had risen over 25 per cent to Rs 20,430 from Rs 16,182. Despite this increase, and having already paid over Rs 1,00,000 in EMIs, Baruah realised she had repaid less than one-fifth of the outstanding loan principal. She had to take a call, whether she could afford paying EMIs over a prolonged tenure, given the fact she was already in her mid-40s, or dispose of the flat!

... contd.