By Chaitali Dutta
* I had taken a home loan two years ago and the tenure has now increased by five years. Should I go for a balance transfer or start prepaying some amount regularly?
—Umesh Kumar
In case you have surplus funds, then repaying part of the home loan regularly is a better solution. This will bring down your loan tenure. In case you are having a tight cash flow, then a balance transfer is a viable solution. The interest rates may stay elevated for another year or so before plateauing out. Look for a new borrower that has a history of quick transmission of interest rate reduction in the past.
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* In the case of a personal loan, would I have to put a collateral and how can I find a personal loan at a cheaper rate?
—Gaurav Rai
Personal loans are not backed by collateral hence they are among the most expensive retail loans. If your credit score is near 800, you will be able to negotiate for a lower interest rate.
* I want to apply for a loan for my son’s higher education. Do I have to give collateral to the bank for a loan of Rs 10 lakh?
—Kuldeep Singh
Collateral free education loan amounts are usually restricted to Rs 4-7.5 lakh. Any loan above these amounts will attract security which could be by way of a pledge of financial assets or real estate.
* What is the procedure followed by banks to assess the market price of a flat and grant a loan?
—Nitin Karama
For a new flat, banks do not go for an independent valuation. Loan is granted on the value of the agreement done with the buyer and the builder. For a secondary sale, where the buyer is availing a home loan, the bank asks for property valuation certificate by their approved valuer.
* I had taken a top-up renovation loan six months ago. Now I have received some money from my brother. Can I clear the renovation loan now and continue with the existing home loan where I have to pay for a year now?
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—Pankaj Goel
Yes, you may pay off either the original loan or the top-up loan. My suggestion would be to check the interest rate you are paying on both. Then repay the more expensive one. In case, the interest rate is the same, then it does not matter which one you pay off, the ultimate math for the loan situation would remain the same.
The writer is personal finance wellness expert and founder of AZUKE Finance. Send your queries to fepersonalfinance@expressindia.com