Do you have financial planning queries?
You can ask rediffGURU Colonel Sanjeev Govila (retd) your questions HERE.
Colonel Sanjeev Govila (retd) is the founder of Hum Fauji Initiatives, a financial planning company dedicated to armed forces officers and their families. He has over 12 years of experience in financial planning and is a SEBI certified registered investment advisor; he is also accredited with AMFI and IRDA.
Anonymous: Subject: Urgent Foreclosure Advice Needed for Private bank home Loan
I am writing to you with an urgent request for your financial guidance regarding the foreclosure of my home loan with a private bank.
Loan Details:
• Loan Amount: INR 19,00,000
• Interest Rate: 10.40% p.a.
• Disbursement Date: july 2013
• Original Loan Term: 20 years
• Current Outstanding Balance: INR 11,00,000
My Concern: I have been making consistent payments on my loan since its inception. However, now I am now interested in closing the loan nine years early, When I contacted the bank to inquire about the foreclosure amount, to my surprise, they informed me that it would be the same as the outstanding balance, i.e., INR 1,100,000. This was unexpected as I anticipated the balance to be significantly lower due to the early closure
My Request: Can you explain why the outstanding balance hasn't decreased more significantly despite early closure request?
• Considering the nine-year early closure, can you please suggest any strategies I can utilise to negotiate a lower foreclosure amount with the bank?
• Additionally, please advice on any alternative loan options or financial strategies that might be advantageous in my situation, taking into account the early closure goal.
Thank you for your immediate attention and expertise. I eagerly await your guidance in this matter.
• The bank's claim of INR 11,00,000 as the foreclosure amount is likely correct, even though you've been making consistent payments. In the initial years, home loans involve significant interest charges. Your monthly payments (EMI) primarily cover the accruing interest initially, with a smaller portion going towards the principal.
• Check your loan agreement or contact the bank for details on any prepayment penalties. Negotiate to waive or reduce the penalty, especially if you have a good repayment history.
• For the alternative option, you can connect with your existing bank for the loan refinancing or loan restructuring. It would help you to revise your existing loan, such as interest rates, payment schedules and other terms. You can also connect with other banks or NBFCs for the same. They will provide you the better option compare with your existing bank.
Before moving forward with any choice, we advise you to carefully consider your options and assess your financial status.
Anonymous: Hi I'm investing 20k every month to Parag Parikh Flexi Cap fund, is that ok?
This fund is a nice choice if you're looking for only one well-managed, long-term investment with the potential for strong returns. It can be a good fit it can invest across market caps, seeking opportunities in both large and small companies. This helps navigate market ups and downs. It has consistently outperformed its peers and market benchmarks over the past few years.
Even though it's one fund, it offers diversification within its holdings, mitigating overall risk. Of course, every investment carries risk, and this fund is no exception. It's important to consider your own risk tolerance and investment goals before making any decisions as all mutual funds are subject to market risk. Suggestion totally depends on investment time frame, risk taking capability and goal.
Neel: Dear Sir I am going to retire from government service in few months under NPS. I want to invest a part of my received amount. Kindly suggest.
As you wish to re-invest some amount received from your NPS. This is a responsible decision that can ensure a comfortable post-retirement life. We suggest you to invest the amount in different asset class such as mutual funds, bonds, FDs etc., in different allocation.
It will help you to maintain the liquidity and stability at your portfolio in different market scenario and help you to grow your amount over the years.
You can also consult with a financial advisor for the personalised holistic financial planning as they will analyse your current financials, risk appetite, other assets & your goals and give you a clear idea about the investment.
Anonymous: Sir, i have around 5 lakh which i want to invest as one time. Should I go for mutual funds or Stock market? If it is stock market then which company or if it is MF then which one is good? Please suggest me. Thank you.
Investment should always be goals & tenure specific & one should always invest by analysing their risk appetite, investment horizon, expected returns and goals. As it creates discipline in investments, prompting people to stay invested and avoid impulsive financial decisions.
If your investment is of long term 5+ years, recommend you to go with equity funds or stocks and if it is short term, debt securities will be the suitable investment option. By analysing the current market scenario, we recommend you not to go with one time investment and go with systematic investment to avoid the market volatility either in mutual funds or stocks.
Secondly, for those who are employed, mutual funds are the best investing choice. You can invest directly in stocks if you have a solid understanding of the equities markets, the economy, and industry and you do your study before making any judgements.
Anonymous: Dear sir, I am going to be 55 in next march. I am a Pvt. Sector Employee, I have 45 lakh as pf as on date and would get 9 lakh as gratuity. 15 lakh in SIPs. Want to quit due to work stress. I am the only earning member. How to plan my monthly income and am I eligible for epf pension?
Working since last 27 yrs. Have 4 lakh in NPS.
As you are planning to quit your job here is what can be considered before doing the same:
- Estimate your monthly expenses: Create a detailed budget factoring in all your essential and non-essential expenses. This will give you a clear picture of your monthly needs.
- Prioritise debt repayment: Ensure you clear any high-interest debts to avoid financial stress.
- Lifestyle adjustments: Consider if adjustments like downsizing your living arrangements or reducing discretionary spending can help bridge any income gaps.
- Plan for unforeseen events: Build a contingency fund to cover unexpected expenses.
You are eligible for an EPF pension if you complete a minimum service period of 10 years and are at least 58 years old. However, since you mentioned turning 55 in March, you'll need to wait for 3 years to access the pension.
To plan your monthly income we can consider your current assets PF corpus (45 lakh), gratuity (9 lakh), SIPs (15 lakh), and NPS (4 lakh). We suggest you to invest the current available amount in mutual funds and opt for monthly SWPs (systematic withdrawal plan) or you can invest some amount in post office schemes and take the advantage of post office monthly scheme.
Please remember SWPs are tax efficient whereas any amount received from POMIS (post office monthly income scheme) will be taxable at your applicable slab rate.
- You can ask rediffGURU Colonel Sanjeev Govila (retd) your questions HERE.
Disclaimer: This article is meant for information purposes only. This article and information do not constitute a distribution, an endorsement, an investment advice, an offer to buy or sell or the solicitation of an offer to buy or sell any securities/schemes or any other financial products/investment products mentioned in this QnA or an attempt to influence the opinion or behaviour of the investors/recipients.
Any use of the information/any investment and investment related decisions of the investors/recipients are at their sole discretion and risk. Any advice herein is made on a general basis and does not take into account the specific investment objectives of the specific person or group of persons. Opinions expressed herein are subject to change without notice.
