Sir, had we not increased the monthly installment, you would have had to repay the home loan for another 57 years,” said the cute executive in her 20s, seated at her desk in the Prabhadevi branch of a private bank.
“But I have taken a loan to be repaid only in 20 years. Can you please explain your calculations?” I asked. I had presented myself there after I received a letter from the bank intimating me that my monthly installment had been increased by `3,500 following the revision in the interest rate.
To give a brief introduction — in 2010, after spending over a month hunting for a house, I finally gave up my dream of owning a house in Mumbai due to the steep prices, and agreed to shift focus to something more viable like Mira Road and sealed the deal for a 2-BHK.
The funds available with me were to be used for paying 15 per cent of the cost of the flat (mandatory to be paid by the buyer, as the banks then disburse the remaining amount), the stamp duty, registration fees and brokerage.
It was then that the nationalised bank with which I had processed my documents refused to disburse the 85 per cent after the bank’s surveyor reported that the flat was over-valued. I had almost accepted that I would lose the token money given until a young executive from a private bank paid me a visit whom I later started calling “Rocket Singh” – Salesman of the year — who promised to get me the amount I required. He delivered and in Diwali, I took the possession of the flat.
Life changed! Buses replaced taxis. Rum replaced whisky, Jockey replaced Calvin Klein and single screens replaced multiplexes. www.spendingdiary.com [1] that chronicles each and every penny spent since 2010 is proof of how I literally lived “hand to mouth”. There was no scope of incurring any extra expense except for medical emergencies. So minutes after receiving the letter of increased in EMI, I was in front of this cute executive mentioned earlier.
I had heard that banks charge a fee to lower the rate of interest. So, confidently I told the executive that I would like to lower the rate of interest that would ultimately lower my EMI. The dynamism of the executive mirrored the functioning of cabinet ministers, and minutes after churning some calculations — she made me an offer that elevated my blood pressure to unacceptable levels.
She said that if I paid `12,734, my EMI would reduce by `1,000 a month. “But madam, that only means I pay you `12,000 collectively rather than split it every month. What do I gain in this?” I asked.
Immediately she made a phone call to a superior sitting in some Charlie’s Angel-kind of remote location. After hearing conversations that seemed tougher to understand than lectures delivered to aeronautical engineering students, the executive finally hung up and looked straight into my eyes.
“Sir, your EMI has been increased in your interest by the bank. Had we not done so, your tenure would have shot up to 690 months,” she said. “WTF? You mean that an increase in 1.75 per cent in the rate of interest will compel me to repay my loan for the next 57 years? Sorry madam, but even if India is struck by famine, I don’t think this will be the scenario,” I screamed in a decibel for which I could have been prosecuted under the Bombay Police Act for noise pollution.
A few other calls later, her final offer was I go for 10.75 per cent fixed rate of interest for the next two years by remitting the same amount. Mathemat-ics to me is what mannerisms are for Rakhi Sawant. So without scratc-hing my head further, I made a call to my fire brigade — my brother-in-law, a chartered accountant and a senior manager with India’s reputed audit firm. After I told him about the situation, he calmly said, “Dippy, always remember, in banking, banks always gain. Customer always loses. You are stuck. Do not pay any money and accept the increased EMI as the rate of interest is likely to go down in the coming few months. Ultimately you will pay for something that you are already going to get for free.” His words were as soothing as a sermon by Sri Sri Ravi Shankar.
Later, I invited a friend to my house for a couple of drinks, as he had been chasing me for some days to speak about his breakup. He was in pain and could not control his emotions. He cried and did not stop for quite some time until I showed him my bank passbook. There was pain on every page!
PS: Dear editor, now that you have learnt of my agony, do we hear about increments anytime soon?
Links:
[1] http://www.spendingdiary.com