By Chaitali Dutta
l My home loan is linked to MCLR, which I took in 2014. As the repo rate has fallen by 100 basis points since February, is it better to switch to a repo-linked loan? —Amit Bapna
Yes, we are in a soft interest rate regime. The switch to a repo rate loan will be beneficial to you. Your service provider should be able to make this switch. There may be charges involved in this change. Find out the full financial implications before signing the papers.
l I wish to take a loan for house construction on the land owned by my mother. Can she apply for the loan? Can I be the co-borrower? —Subham Kumar
The loan application has to be in the joint name with your mother. Here, please note that if you have siblings, they also have a right to the land. The joint ownership may create division issues at the time of inheritance. Please ensure that your mother puts the beneficiaries as per her desire in her will.
l If I take a car loan, will the amount be fixed for the entire period? —S R Nair
The interest rate is typically a floating rate, hence it will change with the repo rate, going forward. In case your query is regarding the EMI, yes, it is fixed. However, with the change in interest rate, the tenure of the loan is adjusted accordingly.
l I have a home loan of Rs 25 lakh. I am purchasing a new flat worth Rs 90 lakh, and want a second loan of Rs 50 lakh. My current take-home salary is close to Rs 1.90 lakh. What will be my eligibility for the second home loan? —Akashdeep Singh
The EMI depends on the tenure of the loan; longer the tenure, lower the EMI. The banks will consider two factors to decide on the quantum of the loan. The loan has to be equal to or less than 80% of the sale value of the property. Additionally, the monthly outgo for all loans put together for the household should not exceed 50% of the monthly income. Assuming that the existing EMI is ~ Rs 30k, you are eligible for a Rs 50 lac loan, provided you have adequate years of service left.
l I need Rs 5 lakh and can repay it within one year. Should I apply for a personal loan or take a loan against property for lower rates?—P G Chandan
A loan against property would be cheaper. But, if the loan availed is 20% or less of the value of the property, it would be advisable not to block the property with a mortgage.
The writer is founder, AZUKE Personal Finance Advisory. Send your queries to fepersonalfinance@expressindia.com