The equated monthly instalment (EMI) for my housing loan has increased over the last year and has started cutting into other expenses. The loan officer at my bank agreed to restructure my loan from 15 years to 25 years and lowered my EMI. Even as this has made things easier, it has increased my overall interest payment. In the prevailing scenario, should I go in for the new agreement and invest the freed money elsewhere, or, is it better to try and lower my loan tenure and pay higher EMIs?
In a rising interest rate regime, the borrower’s burden always increases. This can only be addressed by: (a)Increasing the EMI, (b) Raising the loan tenure, or (c) Making partial prepayments.

There are no set rules to choose any of these . It depends on the availability of funds and personal risk appetite. As increased EMIs were eating into your other expenses and investments, I assume you do not want to increase the EMI.

I would recommend that you stay with the increased tenure and make some partial prepayments from the extra money you have. (most banks allow this without any penalty) This will reduce your principal loan amount and repayment tenure, without affecting the flexibility to repay.

Speaking only for the most economical decision, if you are able to invest your extra cash at a rate higher than the rate on your loan, you should not prepay at all. However, generally, this cannot be guaranteed and it is advisable to keep reducing the principal by making partial prepayments and having a healthy balance between your investments and loan prepayments.

My husband died four months ago. He had an outstanding credit card bill of Rs 4.5 lakh. The card issuer has started harassing me to repay the debt. As of now, I don’t have the liquidity to clear the dues. I am expecting the life insurance claims to come through in a month, after which I can repay the amount. Despite informing the recovery agent about the same, there has been no respite. How can I put a stop to such harassment?
You should immediately meet the bank manager and explain the situation to him. In case of any difficulty in doing so, contact the nodal officer of the bank in writing and apprise him of your difficulties. His name and address can be obtained from the bank’s website. Normally, all banks deal with such cases sympathetically. Depending on the nature of the dues, you may get a partial, or even, full waiver.

You may then inform the bank that you will make the payment by a specific date. You should also ask the concerned manager or the nodal officer, as the case may be, to ensure no recovery agent approaches you till that date. If the harassment persists, you may again write to the nodal officer. After this, you can approach the banking ombudsman appointed for your area by the Reserve Bank of India.

The writer is senior vice-president and group head (retail strategy and branding) at Arcil. The views expressed are his own,. You can send your queries to yourmoney@bsmail.in