By CHAITALI DUTTA
I took a Rs 15 lakh home loan at 8.5% interest price 5 years back. Outstanding principal balance is Rs 13 lakh. I took a second loan of Rs 28 lakh a couple of months ago at 6.7%, of which Rs 19 lakh has been disbursed. Now I have some surplus revenue. Should I use it to prepay the 1st loan or the second loan?
—Arnav Somnath Gore
It is often advisable to spend off the more high priced loan 1st. Here in your case, the old loan is at a larger interest price. Make a bulk payment in that loan with the surplus quantity readily available to you.
I took a home loan 10 years ago. Now, I have some funds. Should I spend a portion of it in one go or spend each and every quarter to retain some funds for emergencies?
—Piyush Kumar Garg
Financial planners recommend that we ought to retain 4-6 months of living expenditures for the month, as an emergency or contingency fund. For instance, if your family expenditures are Rs 50,000 and your EMI is Rs 25,000, then your emergency fund corpus ought to be Rs 3-4.5 lakh. This quantity may possibly be spread out among your savings bank account balance/ bank FD/liquid fund. If you have an sufficient emergency fund, then use the complete surplus to pre-spend your loan in one go. However, if you do not have an sufficient emergency fund, then your 1st priority would be to retain that surplus aside. Any quantity above this ought to be used to lower your liability.
The Deposit Insurance and Credit Guarantee Corporation (DICGC) on bank deposits is now improved to Rs 5 lakh. Does the quantity include things like all bank deposits, PPF, senior citizen schemes deposits, Sukanya Samriddhi, and so on., or only bank deposits?
—Rupa
Your understanding is appropriate. The DICGC cover will include things like only the bank savings and present accounts, fixed deposits, recurring deposits held by the depositor in that bank in the exact same capacity and exact same correct. It does not cover the central and state government-backed schemes. In such a circumstance, we recommend that you and your spouse have numerous accounts in the 4 capacities: individually- you and your spouse, joint with you as main, joint with your spouse as main. This way your deposits will be covered by DICGC to the extent of Rs 20 lakh.
The writer is founder, AZUKE
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