By Chaitali Dutta
l I have outstanding due on my credit card of Rs 1.5 lakh. For two months, I am paying the minimum amount and the interest rate of 35% per month. Is it better to convert the outstanding amount to 12-month EMI?—Prashant Gupta
Any rolling credit on a credit card will have a very high interest rate. The minimum due every month will be utilised first to take care of the charges and the interest in that order. Hence, your outstanding will remain the same, essentially taking decades to pay off the entire amount. Even if you convert to an EMI option, the interest rate will be 30-40% annually. The best way is to gather any funds available, if needed, prematurely closing an FD, and paying off the outstanding in the credit card.
l I have a credit score of about 800. I am planning to take a second home loan. Can I negotiate a better home loan rate with a bank?—Satish Kumar
Yes, with a high credit score, it does give room for negotiation with the lender. However, your income history and cash flows also influence the decision-making.
l I have a joint home loan with my wife. I plan to buy a property in another city. Is it better to pay off the loan? In that case, I will not have much margin money. What should I do?—P S Madhavan
Managing the cash flow with two EMIs needs to be looked into. You may consider finalising the property in the new city, look at the margin requirements, then make a decision on the pre-payment of the existing loan. Another option could be to reduce the EMI in your current loan, or request a lower EMI. That way, you can maximise the loan component in the new home loan. This exercise may require some calculations and optimisations.
l My home loan is based on MCLR. Should I move to a repo rate-linked loan?—Ankur Sharma
Yes, a repo rate-linked loan is always better and brings more transparency to the consumer. Check the repo-linked home loan rates with your lender, then explore a few options with other banks. There would be some one-time cost involved in this move. Do consider the outgo before you move.
l I am taking a sabbatical from work and will do an MBA. Can I take an education loan of Rs 20 lakh for three years?—Ritesh Prashad
Yes, you may take an education loan. The lender may ask for a joint borrower, someone from your family, who could be the co-borrower on this loan. The co-borrower may be an earning member of the family.
The writer is founder, AZUKE Personal Finance Advisory. Send your queries to fepersonalfinance@expressindia.com