By Chaitali Dutta
I am a retired person. I need a Rs 10-lakh loan for my wife’s treatment. I will repay it in one year once I get the medical reimbursement from my office. I do not want to liquidate my investments. What is the best way to get the loan?
—Jitender Verma
For the interim funding, you may consider taking a loan against your financial assets- your FDs or mutual funds, or a life policy (endowment /ULIP). Do get in touch with the bank/FI where you have your financial assets. In case you do not have adequate financial assets, then the last resort would be to take a loan against the property. However, this requires more paperwork and a long process of sanction.
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My son will go to Australia in December to pursue an MBA. We need a loan of Rs 40 lakh over two years. Will the loan be given in my name or in the name of my son and what will be the repayment mode and collateral?
—Aarav Dhondi
The education loan will typically be in the joint name —your son and you. During the two years that your son is finishing his studies, you have to pay the simple interest on the disbursed amount. This may be paid by the earning parent and tax deduction claimed under Section 80E. Once your son starts earning, the repayment by EMI will start. Usually, the loan is sanctioned for a period of seven years. For a Rs 40-lakh education loan, the bank/NBFC may ask for a collateral of similar amount. The collateral quantum varies from bank to bank.
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I took a top-up loan on a floating rate last year and used the money to renovate my flat. Can I repay half of the amount now without any penalty?
—S P Kumar
Yes, a top-up loan or a basic home loan may both be treated at par as far as the repayment is concerned. You may repay part of the top-up loan.
As interest rates are rising, should I go for a fixed rate loan to buy a car?
—Kuldip Sharma
As the car is a depreciating asset and the car loan would be paid off in around five years, the additional interest you pay for a fixed rate loan is not worth the advantage. Take a floating rate loan and try and pay it off as early as possible.
The writer is personal finance wellness expert and founder of AZUKE Finance. Send your queries to fepersonalfinance@expressindia.com