Ramesh's Dilemma: Dealing with variable EMI

The financial crisis of 2007-08 originated from the indiscriminate lending by housing finance companies to borrowers, who were in no position to pay back the amount borrowed. Delinquencies arose when the EMIs went up due to rising interest rates and the prices of homes declined. Variable rates of interest often catch the borrower completely unprepared. A part of the blame lies with the housing finance companies that do not explain the implications to borrowers at the time of sanctioning the. This case is based on the actual experience of an HNI (High Net-worth Individual) who is unwittingly caught in the web of high EMI by a bank. He faces the devil's choice. Choose he must, though, between the options presented by the situation. Unwary borrowers may be able to avoid such situations by understanding the various policy prerogatives available.