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!

“There was no way I could afford such high EMIs at the current rate. I went for an immediate foreclosure of the loan despite having to shell out extra money. The bank charged me an additional 2.25 per cent on the principal outstanding, but thankfully the real estate prices had really appreciated and I was able to sell the flat at a higher price,” Baruah said. She used the proceeds to pay off the loan and invested the profits in a piece of land.

She presently lives in a rented apartment in Gurgaon and is in the process of purchasing it. “Owning a home is good thing, it gives you a sense of security and stability in the world because you don’t have to move or change houses every 11 months when your lease expires,” Baruah says. But quite categorically she is buying her dream house without the ‘help’ of a home loan. With rates likely to shoot up further after Wednesday’s monetary measures by the Central Bank, Baruah seems to have taken the right decision.

Tomorrow: Pharma executive has no pill for his home loan trauma