Owning a home is a dream for many people in India. But with skyrocketing real estate prices, it becomes difficult to buy a house with just savings. This is where home loans come into play. Banks and builders advertise easy EMI schemes, making it look simple and affordable to buy a home. However, many homebuyers later realize they are caught in a financial trap, with delays in possession, increasing EMIs, and legal troubles.
How Home Loan Schemes Turn Into a Nightmare
1. The Illusion of Easy EMIs
Many banks and financial institutions promote home loans by offering lower initial EMIs. The buyer is made to believe that their monthly installment will be affordable. However, over time, interest rates may increase, and what seemed like a manageable loan can become an unbearable burden.
2. Subvention Schemes: A Risky Bet
Subvention plans were introduced to encourage homebuyers. Under this scheme, the builder pays the EMI until the home is ready for possession. It sounds like a great deal, but in reality, many builders default on payments, leaving buyers to deal with banks demanding overdue EMIs. Several cases have reached the courts due to builders not delivering homes on time, yet buyers were forced to pay EMIs without receiving possession.
3. Delays in Project Completion
Many builders promise possession within three years, but numerous projects remain incomplete even after a decade. Buyers who invested in properties under easy EMI schemes in 2015-16 are still waiting for their homes. Meanwhile, they continue paying EMIs while also paying rent for their current residence.
4. Hidden Charges and Interest Rate Fluctuations
Home loan borrowers often fail to read the fine print. Some banks and housing finance companies include hidden charges such as processing fees, prepayment penalties, and late payment fees. Interest rates may also change due to RBI policies, increasing the financial burden on the borrower.
Real-Life Cases: How Buyers Got Trapped
Many buyers in Delhi NCR fell into the subvention plan trap. For example, Manish Minocha, a 44-year-old executive, booked a 2BHK apartment in Gurgaon under a subvention scheme in 2015. He was told that he would not have to pay any EMI until possession. However, as of 2025, he has not received his home, yet he has been forced to pay EMIs due to the builder’s default.
Thousands of such cases have emerged, where homebuyers have approached courts seeking justice against builders and banks.
The Supreme Court’s Intervention
The issue escalated to the Supreme Court, where the court criticized banks and builders for misleading customers. The court ordered a CBI inquiry into the fraudulent practices associated with subvention plans. This ruling has given some relief to troubled homebuyers, but the problem persists as new loan schemes continue to emerge in the market.
How to Avoid Falling Into the Home Loan Trap
1. Research Before You Buy
Before taking a home loan, thoroughly research the builder’s past projects, delivery track record, and financial stability. Verify the bank’s terms and conditions and understand all hidden charges.
2. Read the Loan Agreement Carefully
Do not sign a home loan agreement without reading the fine print. Check for fluctuating interest rates, penalty clauses, and any additional fees that may be applied.
3. Avoid Subvention Plans
While subvention schemes may look attractive, they come with significant risks. Many builders stop paying EMIs midway, leaving buyers in a financial mess. If you do opt for such a scheme, ensure that legal safeguards are in place to protect you in case of default.
4. Prefer Ready-to-Move-In Homes
Under-construction properties come with uncertainty. If possible, invest in a ready-to-move-in home, even if it means paying a slightly higher price. This way, you can avoid delays and financial distress.
5. Calculate Your Affordability
Never take a home loan beyond your financial capability. Experts recommend that EMI should not exceed 40% of your monthly income. Always have an emergency fund to cover at least 6-12 months of EMIs in case of financial instability.
Conclusion
The dream of owning a home should not turn into a financial nightmare. Many easy home loan schemes appear attractive but come with hidden risks. Buyers must be aware of misleading offers, project delays, and fluctuating EMIs. Proper planning, research, and financial discipline can help avoid falling into a home loan trap. If you are planning to buy a home, ensure that your decision is well-informed and financially secure.
