Queries

Rudra Sindwani, Jaipur

I am planning to buy a house and need a loan of approximately Rs 50 lakh. However, I have approached a few banks, but none is offering more than Rs 40 lakh due to my existing car and education loans. These are scheduled to be paid off fully in the next 6 to 9 months. What options do I have to cover the shortfall? Can I obtain a personal loan or another type of loan to make up Rs 50 lakh?

Given your current situation, where banks are offering a home loan of only Rs 40 lakh due to your existing car and education loan, you have a few options to bridge this Rs 10 lakh shortfall. One option is to wait until your existing loans are fully repaid in the next 6 to 9 months. This will improve your debt-to-income ratio, and will likely increase your eligibility for a larger home loan.

If waiting is not feasible, you can consider taking a personal loan to cover the shortfall. However, remember that personal loans typically come with higher interest rates and may be harder to obtain given your existing debt. Another alternative is to look into a loan against property (LAP) if you own another property. LAPs generally offer higher loan amounts at lower interest compared to personal loans. Additionally, you could arrange funds from family or friends, a more flexible and interest-free solution depending on your personal relationships and agreements. Alternatively, consider using your savings to reduce the amount you need to borrow. It can help lower the overall interest burden and make the home loan more manageable.

Each option has its pros and cons, so evaluate your financial situation to choose the best path. Consulting a financial advisor may also help in making an informed decision.

Raoul Kapoor, Co-CEO, Andromeda Sales & Distribution Ltd

Ishpreet Singh, Gwalior

I have bought some Sovereign Gold Bonds (SGBs) recently, and want to invest more in gold. Should I buy gold exchange-traded funds (ETFs) instead of SGBs, as the latter have a maturity period of eight years?

Gold ETFs are a good option as they offer liquidity and ease of trading and have no maturity period. On the other hand, SGBs are attractive due to their additional interest benefit apart from being linked to the gold price, and if you hold till maturity, the entire capital gains (profits) are tax-free. Also, SGBs are tradeable on exchanges and it is not very difficult to buy them from the secondary market with some patience.
So, you can consider diversifying your gold investment through both SGBs and ETFs to take advantage of the different benefits each offers.

Col. Sanjeev Govila (retd), CFP, CEO, Hum Fauji Initiatives

Ravi Prakash, Indore

If I create an emergency corpus for easy liquidity, should I go for liquid mutual funds, debt funds, or bank recurring deposits?

Liquid mutual funds offer high liquidity, generally better returns than bank savings, and are suitable for quick access to funds without any penalty. You may also look at the ultra short-term category which I refer to as unfixed bank fixed deposits (FDs). If you do not require your emergency fund in a tearing hurry and can wait for up to four working days, you can go in for slightly longer-term debt funds with negligible credit or duration risks. Recurring deposits would not be a suitable option as early withdrawal may incur penalties, though you would get fixed returns.

Col. Sanjeev Govila (retd), CFP, CEO, Hum Fauji Initiatives