Things you should keep in mind before a balance transfer

"I have some outstanding on my credit card for the last three months. I want to change the due date for payment on my card. I want to know how it will affect the interest levied on my outstanding."

Interest on credit card outstanding is charged on daily outstanding balance from the date of transaction to the statement generation date. Some banks may offer the facility of changing the statement date to customers. However, the implication on change in statement cycle in this case will be restricted to the change in the number of days for which interest is calculated (depending on whether the statement date has been brought forward or pushed back).

I want to demolish and reconstruct a property owned by my mother. She does not have any source of income. I want to take a loan to build this property. Is there a possibility of some arrangement with a bank, if my mother becomes a co-applicant?

There are many banks and housing finance institutions that would be willing to finance you. However, each institution follows its own norms on income, age, ownership of property, etc, and, depending on that, lays down conditions such as no-objection certificate (NOC) from all other legal heirs, etc.

I am looking for a small-ticket personal loan of around Rs 70,000. Of the three banks that I have accounts with, only one agreed for this small loan. Others said their minimum disbursement was much higher. However, the bank ready for the deal is quoting 25 per cent interest rate. I am ready to pay up to 18 per cent. I tried to negotiate with the direct selling agent, but it did not help. I had taken a consumer loan from this bank and my repayment history is impeccable. I also invest in mutual funds using this bank account. With such credentials, is there anyone I can approach to negotiate on the interest rate?

You may request your present bankers to consider a reduced amount of personal loan, based on your relationship with them. You may also explore the possibility of taking a loan against financial securities such as fixed deposits, RBI bonds, mutual funds, etc, for the exact amount you require, which comes at a much cheaper rate.

I feel the interest rate on my home loan is high, when I compare it with offers from other banks. Can you suggest me a few things I should keep in mind before opting for a balance transfer? How should I calculate whether it makes financial sense or not?

While considering a balance transfer to another bank or housing finance institution, please bear in mind that while your monthly outgo will come down as equated monthly installments (EMIs) are less, you will have to bear some upfront costs such as prepayment penalty to be paid to the current financial institution; processing fees, equitable mortgage (EM) creation charges and other charges, if any, to be paid to the news institution. Thus, you will gain on monthly EMIs, but will have some immediate expenses. Please analyse these based on the amount saved per month, number of EMIs to be paid in future and upfront costs incurred.

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