Co-Borrower Can Help Increase Loan Eligibility

Akhil Anand, Email

I am planning to buy a home worth Rs 1.2 crore but require a loan of Rs 80 lakh. Unfortunately, banks are offering a maximum loan of Rs 70 lakh, leaving me with a shortfall of Rs 10 lakh. What can I do to bridge this gap?

There are several strategies you can explore to manage a shortfall when securing a home loan. One effective approach is enhancing your loan eligibility by adding a co-borrower. This co-borrower could be your spouse, parents, or even a sibling, depending on the bank’s policies. Adding a co-borrower with a steady income can increase your overall eligibility, enabling you to secure a higher loan amount. You may consider a loan against property (LAP). This allows you to leverage another property you own as collateral to secure additional funds. LAPs generally have lower interest rates than unsecured loans, making them a cost-effective choice.

A loan against gold or jewellery is another option, providing quick funds with relatively low interest. If these options don’t suffice, you could borrow from friends or family. However, before choosing an option, evaluate your repayment capacity carefully to avoid financial stress. Always consider the overall cost of borrowing, including interest rates and processing fees, to make the most cost-effective decision.

Raoul Kapoor, Co-CEO, Andromeda, Sales and Distribution Pvt Ltd

Vikash Mohanty, Email

I plan to take part in a motorcycle rally next year for which I will make some minor modifications on my bike. However, there will be no change in respect of the engine specifications. My existing policy will not cover events. If I get a separate insurance cover for my motorcycle, will that be limited to a specific event or will it be valid for a certain duration? Also, can I still ride my modified motorcycle on the road, and will my existing insurance policy still remain valid?

Many insurers do exclude adventure sports and rallies. The changes that you are making do not seem minor to me. I will suggest that you should inform the insurer about these changes. This will help avoid any disputes or claim rejections in the future. They may charge an additional premium from you or may simply acknowledge the changes. But then at least you will be certain that your insurance is valid for routine travel.

Kapil Mehta, Co-founder, SecureNow

Radhika Singh, Email

I am 26 years old with dependent parents and a younger sibling, who is also working. I plan to get married in two years. Should I buy a term plan or enhance the cover of my existing health insurance plan from individual to floater?

At 26, with dependent parents and upcoming responsibilities, a term insurance plan is essential. As a young professional, you’ll get the most economical premium rates. It ensures financial security for your family in case of unforeseen events. Choose a term plan that provides coverage of at least 15 to 20 times your annual income, factoring in future liabilities like marriage and potential loans.

For health insurance, upgrading to a floater plan for senior citizen parents might be expensive; instead, maintain their individual health insurance if adequate. Review policy features like waiting period and claim settlement ratios before deciding. Consider a base plan with a super top-up for cost-effective coverage. Focus on a term plan first and upgrade health insurance gradually. Reassess your needs after marriage to include your spouse and future requirements as well.

Col. Sanjeev Govila (Retd), Certified Financial Planner, CEO, Hum Fauji Initiatives