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Ramalingam Kalirajan |10881 Answers |Ask -Follow
Mutual Funds, Financial Planning Expert - Answered on Jul 22, 2025
Ramalingam Kalirajan has over 23 years of experience in mutual funds and financial planning.
He has an MBA in finance from the University of Madras and is a certified financial planner.
He is the director and chief financial planner at Holistic Investment, a Chennai-based firm that offers financial planning and wealth management advice.... more
He has an MBA in finance from the University of Madras and is a certified financial planner.
He is the director and chief financial planner at Holistic Investment, a Chennai-based firm that offers financial planning and wealth management advice.... more
Question by Chetan on Jul 17, 2025Hindi
Hello Sir, me & wife both are working with in hand salary of 1.4 for me & 86k per month from wife. We have a Home loan of 42.74 lacs (EMI- 39K paid by wife), and that house we have let out at monthly 17K. Besides this we have SIPs 6k me & 10k wife. My SIP is in Liquid fund for Emergency Fund where current balance is 1.47 lac and wife MF SIP has around 4.8 Lacs, and have gold worth 6 Lacs. We both have sufficient Term Insurances (1Cr each)& Health Insurances (SI 10 Lacs) We look after our parents as well where I pay 18k monthly & she pays 15k monthly to her parents. Parents Health Insurances with SI 10 Lacs is also taken care by us and currently premium paid & insurance secured till 2027. Moreover I have OD of 30 Lacs where current outstanding is at 27.30 lacs for which I pay monthly approx 40k interest and make monthly part payment between 10-15k. We are staying in rented premises and overall monthly lifestyle expenses including rent are at 45k. I am looking for a way I can fast track or balance transfer my OD to better interest rate (17.75% currently) or Personal Loan with flexibility of monthly part payments. Other option I was trying to figure out to reduce the outgo of plain interest on this OD is whether it is possible that I transfer my monthly salary to OD Account and then do all the monthly expenses by withdrawing from OD on day to day basis. That will reduce the monthly interest component. I believe. Or if there is any other way or strategy I can work on to Fastrack the repayment. Appreciate your guidance.
Ans: You are managing many responsibilities together. You and your wife have good income, solid insurance cover, and clear intentions. That is the right foundation. Now let’s look at your financial situation fully.
This review is from a 360-degree view and gives guidance on each key area.
? Income and Expense Flow: Basic Cash Flow Status
– You earn Rs. 1.4 lakh per month.
– Your wife earns Rs. 86,000 monthly.
– That makes Rs. 2.26 lakh total monthly income.
– Lifestyle expenses, including rent, are Rs. 45,000.
– Parents support adds Rs. 33,000 monthly.
– Your wife pays Rs. 39,000 EMI for home loan.
– You pay Rs. 40,000 monthly as OD interest.
– Net, over Rs. 1.5 lakh is committed every month.
– That leaves around Rs. 75,000 buffer, which is tight.
? SIPs and Emergency Fund Structure
– Your SIP of Rs. 6,000 goes to a liquid fund.
– That’s a good way to build an emergency fund.
– Current balance is Rs. 1.47 lakh.
– Maintain at least 3–6 months of expenses here.
– With lifestyle cost of Rs. 45,000, keep Rs. 2.5–3 lakh as goal.
– Don’t use this money for OD or debt repayment.
– Emergency fund is protection, not investment.
– Wife's SIP is Rs. 10,000 into mutual funds.
– That has built Rs. 4.8 lakh corpus so far.
– Try not to redeem this for short-term needs.
– Keep it growing for long-term wealth creation.
? Review of Gold Holding
– You own gold worth Rs. 6 lakh.
– Gold is not ideal for income or liquidity.
– But it can be used for emergency borrowing.
– You may use a gold loan at 9–10% rate.
– This is far better than your OD interest of 17.75%.
– If gold loan is taken, use it to reduce OD outstanding.
– Do not sell gold unless repayment pressure is too high.
? Review of Term and Health Insurance
– Both of you have Rs. 1 crore term cover each.
– That is suitable for your income level.
– Health insurance of Rs. 10 lakh is adequate.
– Parent’s cover is also in place till 2027.
– You have done well in this area.
– Continue annual health check-ups to reduce medical surprises.
– Keep top-up options ready as health costs rise every year.
? Review of Home Loan and Rental Income
– Home loan of Rs. 42.74 lakh is in your wife’s name.
– EMI of Rs. 39,000 is paid by her.
– Property fetches rent of Rs. 17,000 monthly.
– Effective EMI burden is about Rs. 22,000 net.
– Interest on home loan is around 8.5% typically.
– There’s no urgent need to prepay this loan.
– Let the rent support EMI partially.
– Focus on OD repayment instead, as that’s costlier.
? Overdraft Facility (OD): Core Issue
– Your OD limit is Rs. 30 lakh.
– Outstanding is Rs. 27.3 lakh.
– Monthly interest of Rs. 40,000 is very high.
– OD interest rate of 17.75% is excessive.
– This is your highest-priority liability.
– You make monthly repayments of Rs. 10,000–15,000.
– This is good discipline, but we need faster strategy.
? Salary Credit to OD Account: Analysis
– You are considering crediting salary to OD account.
– This can reduce daily average balance, hence lower interest.
– Yes, this helps reduce the interest outgo.
– But you need tight budgeting to avoid overspending.
– Use OD only for fixed monthly expenses.
– Track every withdrawal to avoid misuse of limit.
– If discipline is strong, this can lower interest by 5–10%.
– This is a smart temporary measure, but not a solution.
– Your actual solution lies in replacing OD with lower-cost loan.
? Option to Transfer OD to Personal Loan
– Personal loans come at 11%–13% interest rates.
– That’s much lower than 17.75% of OD.
– But not all personal loans allow part payments.
– You need flexibility for partial monthly repayments.
– Check lenders that offer such flexible terms.
– A reducing interest EMI loan is better than OD.
– Explore balance transfer to top banks or NBFCs.
– A longer tenure lowers EMI but increases total cost.
– Choose tenure wisely to balance EMI vs interest.
– If you can prepay aggressively, choose shorter tenure.
? Alternative Strategy: Loan Against Mutual Funds
– You have Rs. 4.8 lakh in equity mutual funds.
– Loan against mutual funds is possible.
– This will give you 7%–9% interest rates.
– You can use this to reduce OD amount.
– It’s better than continuing at 17.75% interest.
– Repay the OD slowly while servicing lower loan.
– This keeps your investments intact and reduces interest cost.
? Alternative Strategy: Loan Against Gold
– You hold Rs. 6 lakh gold.
– Take a gold loan for Rs. 4 lakh.
– Use that to reduce OD balance.
– Gold loans offer flexible repayments too.
– Their interest rate is lower than personal loans.
– Use gold only if cashflow pressure is intense.
? OD Restructuring with Bank
– Talk to your bank for OD interest rate reduction.
– Ask if they can convert OD to a term loan.
– Many banks offer restructuring to salaried professionals.
– Show them your regular salary and credit score.
– Some banks offer ‘Smart OD’ or flexi-loan products.
– Negotiate a lower rate or flexible EMI-based structure.
– Bank may prefer it over constant OD defaults.
? Improving Monthly Surplus: Key Actions
– Reduce personal expenses by 5–10% wherever possible.
– Postpone big-ticket purchases for next 2 years.
– Allocate your surplus only to repay OD.
– After OD is closed, increase SIPs to Rs. 25,000–30,000.
– You will have Rs. 50,000–60,000 available monthly after OD.
– That will make wealth grow much faster.
? Maintain Financial Discipline: Crucial Habit
– Don’t use credit card for cash flow gaps.
– Avoid switching funds between personal and business use.
– Track every income and expense monthly.
– Maintain a spreadsheet or app for financial overview.
– Review all loan statements every quarter.
– Check CIBIL score yearly.
– Don’t let lifestyle inflate before OD is closed.
? Avoid Direct and Index Mutual Funds
– You mentioned mutual funds in your plan.
– If you are using direct funds, it lacks proper tracking.
– Direct funds don’t offer regular portfolio review.
– They miss rebalancing and suitability matching.
– Instead, use regular mutual funds with expert guidance.
– A Certified Financial Planner can align your SIPs to goals.
– Index funds only mirror the market blindly.
– They underperform in sideways or falling markets.
– Actively managed funds can adjust sectors and reduce loss.
– This improves returns over the long term.
? Financial Strategy for Next 2–3 Years
– Focus only on reducing OD fully.
– Do not take new loans unless emergency.
– Use gold loan or MF loan only to replace OD.
– Refinance OD into a personal loan if terms are flexible.
– Maintain your emergency fund above Rs. 2.5 lakh.
– Don’t stop any existing SIPs unless absolutely needed.
– Don’t redeem mutual funds unless for refinancing at lower cost.
– Keep tracking your financial health every month.
– Engage a Certified Financial Planner for quarterly review.
– Once OD is cleared, you can accelerate long-term wealth building.
? Finally
– Your income is strong, and your intent is focused.
– The OD at 17.75% is the only real problem.
– Salary credit to OD account can help a bit.
– But real solution lies in replacing OD with lower-cost loan.
– Use gold or MF loan as second line support.
– Maintain SIPs, insurance, and emergency fund without compromise.
– Once OD is zero, increase your SIPs aggressively.
– Keep all financial planning aligned to your life goals.
Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment
This review is from a 360-degree view and gives guidance on each key area.
? Income and Expense Flow: Basic Cash Flow Status
– You earn Rs. 1.4 lakh per month.
– Your wife earns Rs. 86,000 monthly.
– That makes Rs. 2.26 lakh total monthly income.
– Lifestyle expenses, including rent, are Rs. 45,000.
– Parents support adds Rs. 33,000 monthly.
– Your wife pays Rs. 39,000 EMI for home loan.
– You pay Rs. 40,000 monthly as OD interest.
– Net, over Rs. 1.5 lakh is committed every month.
– That leaves around Rs. 75,000 buffer, which is tight.
? SIPs and Emergency Fund Structure
– Your SIP of Rs. 6,000 goes to a liquid fund.
– That’s a good way to build an emergency fund.
– Current balance is Rs. 1.47 lakh.
– Maintain at least 3–6 months of expenses here.
– With lifestyle cost of Rs. 45,000, keep Rs. 2.5–3 lakh as goal.
– Don’t use this money for OD or debt repayment.
– Emergency fund is protection, not investment.
– Wife's SIP is Rs. 10,000 into mutual funds.
– That has built Rs. 4.8 lakh corpus so far.
– Try not to redeem this for short-term needs.
– Keep it growing for long-term wealth creation.
? Review of Gold Holding
– You own gold worth Rs. 6 lakh.
– Gold is not ideal for income or liquidity.
– But it can be used for emergency borrowing.
– You may use a gold loan at 9–10% rate.
– This is far better than your OD interest of 17.75%.
– If gold loan is taken, use it to reduce OD outstanding.
– Do not sell gold unless repayment pressure is too high.
? Review of Term and Health Insurance
– Both of you have Rs. 1 crore term cover each.
– That is suitable for your income level.
– Health insurance of Rs. 10 lakh is adequate.
– Parent’s cover is also in place till 2027.
– You have done well in this area.
– Continue annual health check-ups to reduce medical surprises.
– Keep top-up options ready as health costs rise every year.
? Review of Home Loan and Rental Income
– Home loan of Rs. 42.74 lakh is in your wife’s name.
– EMI of Rs. 39,000 is paid by her.
– Property fetches rent of Rs. 17,000 monthly.
– Effective EMI burden is about Rs. 22,000 net.
– Interest on home loan is around 8.5% typically.
– There’s no urgent need to prepay this loan.
– Let the rent support EMI partially.
– Focus on OD repayment instead, as that’s costlier.
? Overdraft Facility (OD): Core Issue
– Your OD limit is Rs. 30 lakh.
– Outstanding is Rs. 27.3 lakh.
– Monthly interest of Rs. 40,000 is very high.
– OD interest rate of 17.75% is excessive.
– This is your highest-priority liability.
– You make monthly repayments of Rs. 10,000–15,000.
– This is good discipline, but we need faster strategy.
? Salary Credit to OD Account: Analysis
– You are considering crediting salary to OD account.
– This can reduce daily average balance, hence lower interest.
– Yes, this helps reduce the interest outgo.
– But you need tight budgeting to avoid overspending.
– Use OD only for fixed monthly expenses.
– Track every withdrawal to avoid misuse of limit.
– If discipline is strong, this can lower interest by 5–10%.
– This is a smart temporary measure, but not a solution.
– Your actual solution lies in replacing OD with lower-cost loan.
? Option to Transfer OD to Personal Loan
– Personal loans come at 11%–13% interest rates.
– That’s much lower than 17.75% of OD.
– But not all personal loans allow part payments.
– You need flexibility for partial monthly repayments.
– Check lenders that offer such flexible terms.
– A reducing interest EMI loan is better than OD.
– Explore balance transfer to top banks or NBFCs.
– A longer tenure lowers EMI but increases total cost.
– Choose tenure wisely to balance EMI vs interest.
– If you can prepay aggressively, choose shorter tenure.
? Alternative Strategy: Loan Against Mutual Funds
– You have Rs. 4.8 lakh in equity mutual funds.
– Loan against mutual funds is possible.
– This will give you 7%–9% interest rates.
– You can use this to reduce OD amount.
– It’s better than continuing at 17.75% interest.
– Repay the OD slowly while servicing lower loan.
– This keeps your investments intact and reduces interest cost.
? Alternative Strategy: Loan Against Gold
– You hold Rs. 6 lakh gold.
– Take a gold loan for Rs. 4 lakh.
– Use that to reduce OD balance.
– Gold loans offer flexible repayments too.
– Their interest rate is lower than personal loans.
– Use gold only if cashflow pressure is intense.
? OD Restructuring with Bank
– Talk to your bank for OD interest rate reduction.
– Ask if they can convert OD to a term loan.
– Many banks offer restructuring to salaried professionals.
– Show them your regular salary and credit score.
– Some banks offer ‘Smart OD’ or flexi-loan products.
– Negotiate a lower rate or flexible EMI-based structure.
– Bank may prefer it over constant OD defaults.
? Improving Monthly Surplus: Key Actions
– Reduce personal expenses by 5–10% wherever possible.
– Postpone big-ticket purchases for next 2 years.
– Allocate your surplus only to repay OD.
– After OD is closed, increase SIPs to Rs. 25,000–30,000.
– You will have Rs. 50,000–60,000 available monthly after OD.
– That will make wealth grow much faster.
? Maintain Financial Discipline: Crucial Habit
– Don’t use credit card for cash flow gaps.
– Avoid switching funds between personal and business use.
– Track every income and expense monthly.
– Maintain a spreadsheet or app for financial overview.
– Review all loan statements every quarter.
– Check CIBIL score yearly.
– Don’t let lifestyle inflate before OD is closed.
? Avoid Direct and Index Mutual Funds
– You mentioned mutual funds in your plan.
– If you are using direct funds, it lacks proper tracking.
– Direct funds don’t offer regular portfolio review.
– They miss rebalancing and suitability matching.
– Instead, use regular mutual funds with expert guidance.
– A Certified Financial Planner can align your SIPs to goals.
– Index funds only mirror the market blindly.
– They underperform in sideways or falling markets.
– Actively managed funds can adjust sectors and reduce loss.
– This improves returns over the long term.
? Financial Strategy for Next 2–3 Years
– Focus only on reducing OD fully.
– Do not take new loans unless emergency.
– Use gold loan or MF loan only to replace OD.
– Refinance OD into a personal loan if terms are flexible.
– Maintain your emergency fund above Rs. 2.5 lakh.
– Don’t stop any existing SIPs unless absolutely needed.
– Don’t redeem mutual funds unless for refinancing at lower cost.
– Keep tracking your financial health every month.
– Engage a Certified Financial Planner for quarterly review.
– Once OD is cleared, you can accelerate long-term wealth building.
? Finally
– Your income is strong, and your intent is focused.
– The OD at 17.75% is the only real problem.
– Salary credit to OD account can help a bit.
– But real solution lies in replacing OD with lower-cost loan.
– Use gold or MF loan as second line support.
– Maintain SIPs, insurance, and emergency fund without compromise.
– Once OD is zero, increase your SIPs aggressively.
– Keep all financial planning aligned to your life goals.
Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment
DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Users are advised to pursue the information provided by the rediffGURU only as a source of information to be as a point of reference and to rely on their own judgement when making a decision.
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