1. As a thumb rule, for comfortable loan repayments, your Equated Monthly Installment (EMIs) of all loans put together should not exceed 30% of your net income, or 40% max. if your first home loan is the only loan.
2. Getting rid of any costlier loan entirely should be your first priority because any "risk-free" investment returns would fail to compensate for a very costly loan EMI.
3. Therefore, you should utilize any surplus money to liquidate these costly loans on priority.
4. You should consider the following ways to prepay these costlier loans :-
a) Firstly, liquidate your low-yield investments (if any) which you may still be holding.
b) Then sell any of your existing investments where the yield is lower than these costly loan interests, say from your savings bank, fixed deposits, post office savings, etc..
c) If required, even make lump sum withdrawal from your low-earning Public Provident Fund (PPF) account, if possible.
d) You can also sell off non-performing mutual funds and loss-making shares to clear off these costlier loan debts.
e) If you are still falling short, there is no harm asking for an interest-free loan from your relatives for a short while.
5. Having got rid of these costlier loans, you should cut down your lifestyle expenses in order to arrange for repaying your relatives, if loans were taken from them.
6. You should continue with your existing home loan, if any, as it is a tax-friendly "good debt" investment, provided it is for your first home for personal living, and at a reasonable rate.
2. Getting rid of any costlier loan entirely should be your first priority because any "risk-free" investment returns would fail to compensate for a very costly loan EMI.
3. Therefore, you should utilize any surplus money to liquidate these costly loans on priority.
4. You should consider the following ways to prepay these costlier loans :-
a) Firstly, liquidate your low-yield investments (if any) which you may still be holding.
b) Then sell any of your existing investments where the yield is lower than these costly loan interests, say from your savings bank, fixed deposits, post office savings, etc..
c) If required, even make lump sum withdrawal from your low-earning Public Provident Fund (PPF) account, if possible.
d) You can also sell off non-performing mutual funds and loss-making shares to clear off these costlier loan debts.
e) If you are still falling short, there is no harm asking for an interest-free loan from your relatives for a short while.
5. Having got rid of these costlier loans, you should cut down your lifestyle expenses in order to arrange for repaying your relatives, if loans were taken from them.
6. You should continue with your existing home loan, if any, as it is a tax-friendly "good debt" investment, provided it is for your first home for personal living, and at a reasonable rate.