SBI Maxgain Home Loan is the loan offered by SBI which provides an overdraft Loan facility for the Home Loan. This means one can withdraw any amount from this Overdraft Limit and also credit back when he has surplus back into it and hence saving the Interest.
Ever wondered, if you can save some interest on your home loan with any kind of temporary surplus money. You cannot use this money to close the loan due to some other liability coming in a few months.
In short, you would like to have the liquidity of the money but don’t want to pay the home loan interest for so much time. SBI Maxgain home loan is the loan that you can consider in this situation.
e.g. If a person takes a home loan of Rs. 50 lacs and after paying the EMIs for a few months the same person receives a surplus of Rs. 20 Lacs. Now say this person needs this 20 Lacs after 1 year, then these 20 lakhs can be optimized in a much better way. SBI Maxgain Home Loan Scheme is the answer.
He can keep the surplus 20 Lacs in his Loan account for one year which will help him to save interest on the same for this period. Post one year, when he needs this money, he can withdraw the same. The interest would now be charged on the current principal due which will include this 20 Lacs as well. EMI at all the time would remain the same.
This means that when interest charge is less, the loan principal amount would be reduced more and hence effectively reducing the overall interest outgo on the loan.
On the flip side, the interest rate charged by the bank is a little higher (0.10% approx).
What is SBI Maxgain Home Loan?
This is a type of Home loan provided by SBI apart from Normal Home Loan and is a combination of Home Loan and Overdraft Facility to the tune of your outstanding balance (Not the Original Sanctioned amount).
For the time you deposit any liquid cash to the OD Account, the bank doesn’t charge any interest that it usually does in a normal home loan. Any surplus funds with you can now be effectively utilized to save on interest while still being able to use them whenever needed.
More about Overdraft Facility of SBI Maxgain.
SBI opens the loan as an overdraft account and issues a debit card and cheque book. This overdraft account is similar to a savings account. In case, an individual has surplus funds for a short tenure then he/she can park that surplus fund in this overdraft account and this amount will be subtracted from the principal and then the interest will be calculated.
The individual can withdraw the surplus money deposited in an overdraft account at any point in time and can save an equivalent amount of money in the interest.
Why SBI Maxgain home loan?
Most of the people get confused about whether to make a prepayment with their monthly savings or to keep it aside for emergencies. With an SBI Maxgain home loan, you can have sweets in both your hands.
Generally one keeps his monthly savings in his savings account which earns a lower rate of interest (approx. 4%). These monthly savings, if deposited in the overdraft account will in effect reduce your Home Loan interest (approx. 8.5 – 9%).
Is SBI Maxgain so good?
SBI Maxgain is a product that suits quite a few but when it comes to individuals to make the decisions. Let us understand both the advantages and disadvantages/Challenges and make an informed decision.
Advantages and Disadvantages of SBI Maxgain
As mentioned above if an individual receives some surplus cash then he/she can park that surplus amount into Maxgain account and can withdraw it at any point of time.
|Higher rate of interest|
The rate of interest for SBI Maxgain home loan account is usually 0.10 to 0.15% higher than other home loan products offered.
|Savings on Interest|
When a person parks any additional surplus then the interest is saved as that surplus is considered as principal paid.
A person may land up in paying more tax by parking the surplus amount into this account. The interest not levied due to amount parked in OD will not be part of tax deduction under Sec.24 B. Hence, one may land up in less tax benefit.
|Better than FDs|
Parking your surplus in a product like Maxgain overdraft will fetch you more than compared to Bank FDs in general. It also is more liquid than FDs which usually have penalties or reduction of interest of broken earlier.
Self-employed individuals and businessmen are not eligible for SBI Maxgain home loan
Here is an interesting post on SBI EMI Calculator on Home Loan
Other Banks Offering similar product as SBI Maxgain-
- Axis Bank Super Saver Home Loan
- IDBI Home Saver Home Loan