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Your Queries – Loans: Pay a heftier EMI instead of waiting to pre-pay a lumpsum

Home loan interest rates are rising now.

home prices
The interest is calculated on a daily reducing balance in your home loan, hence early repayments save you more interest.

By Chaitali Dutta

Home loan interest rates are rising now. I have a new loan for 10 years. Should I double the EMI amount or accumulate some lumpsum to repay a part of the principal?
—Dhiraj Kumar

In case you have surplus funds monthly, increasing the EMI is a suitable way forward in the current times when the interest rates will continue having an upward trend. The interest is calculated on a daily reducing balance in your home loan, hence early repayments save you more interest.

What is the process I should follow to take a gold loan for one year as I need money for an emergency?

The first option would be to enquire with your present bankers where you have your salary account or have the bulk of your money. The chances of getting a better deal and service would be higher. In case your banker does not provide gold loans, then you may look at some financial institutions that are market leaders in gold loans. It is advisable to go with known, reputed organisations for your gold loan as you would like to get back your original ornaments/gold pieces intact once you pay off the loan. The process is similar for banks/FIs. The ornaments are first checked for gold purity, weighed and approximate valuation ascertained. You will be sanctioned a loan depending on the gold valuations. The paperwork is then completed before the disbursal of the loan to your account.

I am a senior citizen and my retirement funds are in nationalised bank’s fixed deposit schemes and are fetching very low rate of interest. If I invest Rs 5 lakh each in private banks, will my money be safe?
— name withheld

FDs (or any deposits) that come with a higher return have an inherent risk to the capital. The inherent risks are the liquidity risks and default risks. Under the DICGC guarantee, deposit amount (including interest) up to 5 lacs per person, per bank is covered. If you opt for interest payouts, you may opt for a Rs 5 lakh deposit. In case you are opting for a cumulative deposit, then the maturity amount should not exceed Rs 5lakh to be covered under DICGC.

The writer is founder, AZUKE Personal Finance Advisory (
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