You can get a personal loan against your FD from the same bank without having to withdraw your money early. Your deposit continues to grow at a pre-determined rate without interruption.
I have a total of Rs 20 lakh in bank deposits. Is it possible to put my FDs up as collateral for a bank loan at a lower interest rate?
Yes, you can get a loan against your FD from the same bank without having to withdraw your money early. Your deposit continues to grow at a pre-determined rate without interruption. For the duration of the loan, you pay interest that is a few basis points greater than the FD rate. If you do not return the loan by its due date, the revenues from your FD will clear the loan first, and you will receive the remaining balance.
Approximately half of my fixed-income investments are held in my SBI Overdraft Account for my home loan. It has a 7.7% interest rate (saves that amount from my loan). Should I keep it, transfer it to another instrument, or pay off the loan?
This offers fantastic cash flow management, interest payment management, asset allocation, and rebalancing. Continue with the status quo if your financial flow allows you to pay the EMIs. Only consider paying off the loan if you have a pressing need to do so.
I intend to take a home renovation loan to supplement my existing home loan. Will I be able to deduct the loan from my taxes, and will the bank charge me any pre-payment penalties?
The home loan and top-up loan will be treated as a single entity for tax purposes under Sections 80C and 24B. Refer to the sanction letter for pre-payment charges and read the small print for terms and conditions. There are no prepayment charges on a floating rate loan, but they are charges on a fixed-rate personal loan.
I defaulted on a car loan a few years ago. I’d like to get a home loan from the same bank, but it’s turned me down. Should I go to other banks without telling them about the default?
Each Financial Institution reports personal loan default, which is present in the borrower’s credit score. If you have paid off all of your debts, have your credit score corrected at the same bank where you defaulted. If not, pay off your debts before applying for a new loan. Before approving a loan, financial institutions will do a credit check with CIBIL, Equifax, or Experian.