By Chaitali Dutta
I have outstandings of Rs 4 lakh on two credit cards and I am paying the minimum amount for the past three months. Should I liquidate funds from my fixed deposit and repay the amount in full? —Akash Batra
The revolving loans on credit cards are expensive. The interest rate can be in the range of 35% to 40% per annum. If the cash flows are not sufficient to pay off the credit card loans, then using the FD funds is financially a sound solution. You may also explore taking a loan against the FD from your bank to pay off the credit card loan. That way, you can reduce the interest outgo from 35-40% to only 10-11% per annum.
My father had taken a home loan and he is no more. My mother is paying the EMI and almost 90% of the amount taken has been repaid. Can she now take a top-up loan against the existing loan? —Vignesh
The loan can only be granted to the property owner. Here, I am assuming that the property was in the joint names of your parents. In such a situation, the top-up loan is possible.
I repaid my home loan three years ago. I need funds to renovate the flat now. Can I apply for a top-up loan or a loan against property? —Prateek Sharma
If the original loan is paid off, then a top-up loan at home loan interest rates is not possible. However, you can apply for a loan against property. The interest rate for a LAP is slightly higher than that of a home loan.
If I repay my car loan within six months, will the bank put a penalty on the outstanding amount? —Shubham Kapil
Usually, yes. However, have a detailed look at the sanction letter to find out the exact penalty rate and period. These metrics are different for each lender.
I had taken a loan with my sister as the co-borrower five years ago. After her marriage in December this year, can I replace her and make my wife as the co-borrower, who is also working? —Kuldeep Gupta
The ownership of the property is critical to decide on the borrowers and co-borrowers. If the property is in your and your sibling’s name, then even after marriage, your sister’s name cannot be removed from the loan. She will continue to have her rights to the ownership of the property. If your wife is not co-owner of the property, she cannot be added as a co-borrower mid-way in the loan.
The writer is founder, AZUKE Personal Finance Advisory.