I will be travelling to Europe in October. I would like to know the best way to carry foreign exchange?
You can carry forex in multiple ways. You could either take Euro currency notes, Euro denominated travellers cheques (TCs) or a prepaid forex card. Any authorised dealer will issue you the physical currency or TCs. Most leading banks also offer prepaid cards in foreign currency. According to regulatory norms in India, you could carry up to $25,000 per visit for a business trip and $10,000 per calendar year for a private visit abroad. Travellers are allowed to purchase foreign currency notes/coins only up to $3,000. Balance amount can be taken in the form of TCs or forex cards. TCs or prepaid cards are safer options to carry around on a trip. Additionally, you also have the option to use your international debit or credit card issued by your local bank.
I had taken a home loan of Rs 62 lakh in June 2010 from a housing finance company, at 8.25 per cent for the first year and nine per cent from the second year till March 2012. After that, my rate was 12 per cent (retail prime lending rate was at 16.5 per cent, I got a cut of 4.5 per cent) from April 2012 with the 156-month term extended to 258 months. I prepaid Rs 1 lakh in May this year, plus Rs 33,000 to increase my spread and lower my rate to 10.75 per cent. I also increased the EMI to Rs 68,311 and lowered my term to 156 months (13 years). Am I right in doing this? Because when I was planning to prepay another Rs 1 lakh, the executive told me to keep paying the EMI and invest any surplus for liquidity. I plan to prepay Rs 1 lakh every alternate month, keeping my EMI and loan term constant. Please advise.
It is unlikely that today you will be able to invest in a guaranteed return product that will deliver risk-free returns of 10.75 per cent (your home loan interest rate) and hence it is sensible to keep prepaying your loan as and when you have surplus money. It may be difficult to service a higher EMI every month and so it would be advisable to keep the EMI as low as possible. This would ensure that the loan gets over far ahead of the scheduled term since any prepayment goes directly to reducing your principal and consequently the loan term.
The writer is MD & head, private & business clients (India), Deutsche Bank