A Home loan still has a special relevance in an average Indian’s life – it is possibly the most significant asset created for the family and a home is indeed treasured as a precious heirloom that needs to be passed on to the next generation.
We haven’t yet reached the Western standards on home loans – often refinanced, converted into bonds and passed on to retail customers, and often the home is even traded even before the Mortgage draws to its natural end.
It was late 2004 when I finally was able to buy my dream home financed by a friendly mortgage scheme. I was still to be 30 and it was a significant dream that bore fruition. I was a typical Tam-Brahm in my approach, cautious and conservative. Not interested in a car (I never considered it to be an asset) or in that exotic vacation in Bali (I find it tough to ‘sell’ experiences to myself), I was keen on having a ‘own roof’ over my head.
The property was pre-fixed and relatively a modest acquisition. I wasn’t stretching my finances and chose an aggressive repayment tenor of 10 years whereas conventionally the tenor tends to be 15 or 20 years. Nowadays it is possible to even look at a ’30’ year loan. I got the option of using a ‘overdraft floater’ which meant I could cut my interest costs by parking my idle funds in the account.
Well the interest rates did change and typically this reflected as a tenor extension rather than a change in EMI (it is a neater option and involves less paperwork to simply float the tenor than to calibrate the EMI). Effectively this increased by about two odd years and only recently did my mortgage mature. I had paid only 40 % of the scheduled interest since I mostly had spare funds parked in the account.
So ‘Mortgage’ done and dusted as one nears 40 is surely something to be celebrated. It was after all my ‘first’ major asset – the others that came subsequently including shares, mutual funds, fixed deposits, a second home are secondary in nature.
A friend told me that in America there was a tradition of ‘burning the Mortgage deed’ after having a party with family and friends. Guess emotions must be heavy for people to have let off their angst in such a spectacular manner. As I explained above my mortgage experience was far from being a conventional one – else I can understand the angst that would drive such a celebration.
Imagine the usual scenario – people stretch themselves to arrange the ‘margin’ payment, they take the maximum possible loan amount and tenor with little buffer available for rate hikes, often under-construction properties have delays in getting actual possession, furnishing your dream home costs a bit too. And by then you are also bogged by other routine expenses in your life-cycle – medical needs kick in and children education requirements are a sober reality as well.
So when the magical tenure of 20 – 30 years passes off finally, one is definitely entitled to let out a sigh of relief and possibly a bit more. Reminds me of a nice couplet by the popular shayar Bashir Badr –
‘Log toot jaate hain eik ghar banaane mein
Tumhe taras nahin khaate bastiyan jalaane mein’