Money Matters

Home Loan

Sushil Bhope: My mother owns a residential plot, and I want to build a house on that land. I have no other siblings except a sister who lives in the US. Can I get a home loan against this land?

Rakesh Singh, Director, Aditya Birla Housing Finance, replies:

A son/daughter can take a home loan in his/her name for constructing a house, but the landowner (father/mother) has to be a co-borrower in that case. If you have siblings, they must submit a no-objection certificate for the same. You should contact a housing finance company or financial institution to understand the legalities.

Investment

Rahul Sen: I have been investing in mutual funds (MFs) through a portal for the past five years. It did not offer a direct plan when I started, and I have always invested in regular schemes until now. The portal is a customer-friendly platform and generates good reports. But now I want to switch to direct plans as I choose my funds. What will be the benefits and tax implications if I do it?

Vivek Ranjan Misra, Head of Fundamental Research at Karvy Stock Broking, replies:

There is no specific difference between direct and regular plans - they only differ in terms of returns. In a direct plan, there is no market intermediary and the asset management firm does not have to bear distribution expenses. So, the annual expenses are lower; you get higher returns and taxes will vary accordingly. However, each scheme has its pros and cons. While a direct plan will give you higher returns compared to a regular plan, the scheme being the same, the former only works for people who have considerable experience in this field. Others may benefit from the services they receive from distributors who can help them select the right funds. Whether one should opt for a direct plan or not depends on an investor's depth of experience.

Health Insurance

Santosh Sharma: I am a 35-year-old chartered accountant, and my employer provided me with a health insurance policy. But I have left the job to start a venture of my own and do not have a health cover right now. I am also getting married by year-end. Should I buy a new health cover after my marriage so that it will also cover my wife?

Sanjay Datta, Chief of Underwriting, Claims and Reinsurance at ICICI Prudential Lombard, replies:

Medical expenses can take you by surprise and hit you hard, especially when you are entering a new phase with added responsibilities. So, it won't be prudent to forego a health insurance cover until year-end. You can buy an individual health policy right away and add your wife later by endorsing your existing policy.