My bank offered me a pre-approved home loan. I plan to purchase a property next year, but I am waiting for some correction in real estate prices. In what situations do pre-approved home loans work? What are their advantages and disadvantages?
Pre-approved home loans are offered by most banks, and work well if the purchase is made within two-three months of the loan approval. You would be able to plan your purchase based on the loan amount sanctioned and the money you have saved. Last minute hassles in loan approval can also be avoided, if you have the it approved well in advance. The bank might be able to help you with a list of their approved properties/builders and make your home search easier.
Typically, pre-approved loans have a limited validity period, not beyond 90 days, and you will have to apply for a fresh loan after the expiry of validity. Banks charge a processing/administration fee for loan approvals, which might have to be paid again for a fresh approval. However, the final disbursal of the loan will depend on further documents relating to the property and any other document as required by the bank.
My bank is giving me a 10 per cent discount on 10 gm gold coins. However, the after-discount price is the same as that offered by the local jeweller. What are the advantages of buying gold from banks? Is it possible to buy on instalments by giving electronic clearance system instruction? I hold a salary account with the same bank, as well as a credit card.
Buying gold from a bank offers quite a few advantages, as you are buying from a trusted and reputed organisation. Some key benefits include reduction in fraud, as most reputed banks are into this segment, and the purity because the coins are assay-certified and tamper-proof. Normally, you can place an order via online banking, issue a debit mandate to your savings account or issue a cheque favouring the bank.
I deposited money in a 1,000-day deposit from a leading public sector bank, which was offering 8.5 per cent. It will mature by the end of this year. Due to some emergency, I need some money now. Is it advisable to withdraw the fixed deposit (FD) money or should I take a loan against it?
You could opt for an overdraft against your FD to take care of your requirements. However, most banks provide overdraft facility by keeping a certain margin of the FD amount, at the rate of interest prescribed by the bank on overdraft against FD, in addition to other charges disclosed to the customers upfront. The limit and charge will vary across banks. Please contact your bank to know the details. On the basis of this information, you can decide whether to opt for an overdraft or prematurely withdraw your FD. Please remember the premature withdrawal of FD reduces the rate of interest, depending on the respective bank’s policies.
The writer is managing director & head, private & business clients (India), Deutsche Bank. The views expressed are his own. Send your queries to yourmoney@bsmail.in