SBI MaxGain Home Loan Review – With FAQ’s

POSTED BY manish ON May 27, 2013 COMMENTS (680)

In this article we are going to share SBI Maxgain Home Loan review with you. Now a days many home loan borrowers are opting a particular type of home loan from State Bank of India which is called Max Gain because it has many advantages compared to other kind of home loan scheme’s. In this SBI Max Gain home loan, an Overdraft (OD) account is assigned to the customer’s home loan & any amount parked by customer is treated as loan repayment for the purpose of interest calculation, for the days, the amount stays there in that OD account. As on date following banks are offering similar types of home loan to their customers. I would like to thank to Mr. VKS Nathan who gave the Idea of this article.

sbi maxgain home loan review

SBI, IDBI, CITI, HSBC & Standard Chartered. Punjab National Bank can also be added in this list but it’s offering a combo of normal loan + Overdraft. In this article, we are going to discuss only SBI Max Gain as in OD linked home loan, the maximum business is with SBI & the most discussed topic on Jagoinvestor Forum is also related to SBI Max Gain Scheme

What is an Overdraft account?

Before we discuss Max Gain, first understand, what is an Over Draft Account? All of us are well aware of functioning of an ordinary saving bank (SB) account. Here account operates between zero to positive & positive to zero. As we deposit our money, it’s used by bank & we get interest on our money from bank. In case of an OD account, bank first ask for a security & then assign a credit limit on the basis of the market value of that security. This security may be Fixed Deposits, Insurance Policies, National Saving Certificates, Shares, Mutual Fund units, house/commercial property etc. Now when we are using this assigned credit limit, the amount is going from zero to negative zone & when we are repaying, it’s coming from negative to zero. As we are using bank’s money in this case, the interest ‘ll be paid by us to bank. That’s how an OD account works.

So what is the correlation between Max Gain home loan & Over Draft account?

For Max Gain borrowers, State bank of India opens an Over Draft account where the Credit limit as discussed above is equal to the loan value assigned to the borrower. Here underlying security is the home you have purchased or constructed from that loan amount. Now as & when you are parking any surplus amount into this OD account, the parked amount is treated as payment towards loan (effectively you are bringing down your loan liability from negative towards zero position) and thus the interest ‘ll be charged only on the difference amount i.e. total loan amount – parked surplus amount.

What is the primary benefit of SBI Max Gain Scheme?

Well the primary benefit of MG is to keep your liquidity intact & still bringing down your interest outgo. To understand it better, please imagine a situation you are running a home loan of 30L Rs. & now you do have 2L Rs. with you to prepay. In normal home loan, your 2L Rs. ‘ll be accepted by bank & adjusted towards home loan & your amount is gone forever so no liquidity for you of that 2L Rs. amount. On the other hand, if you are MG customer, simply park those 2L Rs. in your MG account & your interest outgo ‘ll be lower from that month itself till those 2L Rs. or a part of it is there as surplus in MG account.

What is Drawing Power ?

Drawing Power is nothing but your as on date actual outstanding loan amount. Before final disbursal or start of loan repayment, it’s your sanctioned loan amount. Once your EMI starts, it’s your as on date actual outstanding loan amount. Please check Image below, Drawing Power here is 1867053 Rs. as on date. (Click here to understand it better)

What is Available balance?

Before final disbursal, it’s the sum of undisbursed amount + parked surplus & post final disbursal, it’s your parked surplus amount which is available to withdraw. Please check Image below, Available Balance here is 1084177.72 Rs. as on date. (Click here to understand it better)

What is book balance?

It’s the adjusted loan amount arrived after deducting the Available Balance amount from Drawing Power. In your account statements it’s shown with a negative sign. Please check Image below, Book Balance here is  – 782875.28 Rs. as on date. (Click here to understand it better)

SBI MaxGain Home Loan Review - With FAQ's

Is there any extra interest for Max Gain?

No, the interest for home loan is same in SBI be it for normal home loan or for Max Gain.

I’m an existing SBI home loan customer. Can I convert my old term loan to Max Gain?

Yes, you can. Please contact your loan serving branch or RACPC for the required paperwork to be done. This may be an outdated info so please do check with your loan serving branch for current day rules on conversion.

I have taken the Max Gain for an Under Construction Property. Can I park surplus amount to save on interest outgo?

The answer is yes & no both. Yes you can park your surplus during under construction phase but do remember SBI is disbursing partially at this juncture & in case due to any emergency you want to liquidate your surplus, SBI ‘l not allow the same. so park only that much surplus, you feel you ‘ll not need even in an extreme emergency.

If I’m parking some money on monthly basis or in lump sum, will my loan term come down or EMI go down?

No. Neither your EMI ‘ll come down nor your loan term. The only saving is in terms of interest outgo. To understand it better, Let’s assume a test case of loan amount 30L Rs. @ 10% Rate of Interest for 20Y term. The normal EMI for these nos. ‘ll be 28951 Rs. The break up of your EMI for first month ‘ll be 25000 Rs. interest & 3951 Rs. for principal repayment.
Now if you do have 2L Rs. surplus in the very first month & prepay the same as below –

Case – 1 Normal home loan

Your 2L Rs. is gone & outstanding loan amount ‘ll come to 2796049 & interest outgo ‘ll still be 25000 Rs. but the no. of months ‘ll come down from original 240 to 198 months.

Case – 2 Max Gain home loan

Your 2L Rs. are parked in that OD account & the interest for the very first month ‘ll be calculated on 28L Rs. & thus it ‘ll be 23334 & thus there‘ll be an interest saving of 1667 Rs. which‘ll remain available in your OD account as surplus along with your parked surplus 2L Rs. so for next month, the parked surplus amount ‘ll be 201667 Rs.

Please do note in case 2 above, Your loan term is still 240 months but the saving of interest ‘ll keep on increasing on mly basis from the parked surplus & of course the liquidity of those 2L Rs. is there.

How can I calculate my saving in Max Gain?

To know your actual saving, first of all please demand a loan amortization schedule from your loan serving branch & now for each month compare the scheduled interest outgo as per your loan amount. schedule & the actual interest outgo.

What should I do to maximize the savings in Max Gain?

If you are paying your EMIs from SBI’s SB account, you can maximize your benefits. How? here it goes. Say 15th is the EMi date on which EMi amount is debited from your SB acct. Now in a normal home loan, people ‘ll keep at least 2-3 months’ EMI amount as buffer in SB account. but in case of Max Gain, you do not need to keep buffer in SB account. Keep this buffer amount also in your MG account along with your routine surplus amount. now use the power of net-banking of SBI for your own good & create a schedule transaction of your EMI amount 28951 Rs. (in the above example) to be transferred on 13th of every month from MG account to SB account. At a time you can schedule for next 12 months by using standard instruction. So it’s technology that’s helping you.

I can transfer to MG account from my existing net-banking enabled SB account but reverse is not happening. why?

The answer lies in the fact that Net-banking transaction rights on your MG account is not enabled yet by your loan serving branch. if final disbursal is done, you can apply for transaction rights. if only partial disbursement has been done, sorry, you can’t apply for transaction rights till final disbursal.

Is it mandatory to purchase property insurance & life insurance along with Max Gain?

Having property insurance as well as sufficient life insurance is compulsory but purchasing the same from SBI’s sister cos. like SBI General ins. & SBI Life ins. is not at all mandatory. if you feel that policies are being cross sold to you to exploit your position (home loan seeker), please contact the AGM of your local RACPC where your loan application is under processing.

Is SBI charging higher processing fee for Max Gain?

No, as on date there is no differentiation in fee for term loan & Max Gain but SBi reserves the rights to charge different fee.

Can I claim section 80C principal repayment benefit for the surplus amount parked in Max Gain?

The answer is NO. Only the regular principal repaid by you from your EMI as part of your loan amortization schedule is available for tax benefit under section 80C. the parked surplus amount is liquid money & you can withdraw it any time, hence it’s not considered as actual repayment of loan & thus not eligible for tax benefit.

Can I avail cheque book & ATM card for my Max Gain account?

Yes, as & when you‘ll demand these, SBI ‘ll offer you the same. In case you are already holding an SBI SB acct. linked ATM card, you have the option to link your MG acct. also with this existing ATM card.

Can I enroll my MF SIPs in Max Gain?

Yes but do note, there should be a surplus balance i.e. available balance on the date of SIP, else your ECS or SI mandate ‘ll bounce.

Can i pay for my utility bills, credit card payments, online shopping from Max Gain?

Yes, you can do all this & more. In fact it’s in your best interest that you treat your MG account as your primary money parking account & route all your transactions through it so that money is lying there for maximum possible time & thus helping you to bring down your interest outgo.

I used my MG account ATM card to withdraw cash from other bank’s ATM & I was charged the money very first time in the month. Why?

The reason is, as per RBI’s circular 5 transactions on other banks’ ATM are free only for SB account & in this case, you forget the point that your MG account is not SB account. it’s an overdraft account.

For an imaginary situation, my loan amount is 30L Rs. & parked surplus amount is also 30L Rs. Does it mean, my loan is closed & I can claim my property papers from SBI?

No, your loan is not closed. Only interest outgo ‘ll become zero & EMi ‘ll remain continue as it is. Yes the interest part of your EMI ‘ll keep on accumulating in your MG account. If you want to close your loan at this point, you w’d have to inform SBI in written & now SBI ‘ll adjust your parked surplus amount towards the outstanding loan amount. you ‘ll lose the liquidity of your money but loan ‘ll be over & now you can get your property papers back.

How can I transfer my loan from other banks to SBI Max Gain?

For loan transfer, first of all contact your existing lender & ask for following things.

  • Loan Account statement from day one.
  • List of Documents, which were submitted by you at the time of availing original loan. In day to day language of bankers, it’s called LOD.
  • As on date outstanding loan balance with applicable interest, penalty & any other fee to close the loan.

Now contact, the nearest SBI Branch (if you do have an existing SB account with SBI, it’s advisable to contact there for ease of operation). Inform in that branch that you want to transfer your loan from existing bank to SBI Max Gain. fill the application form, submit the necessary papers & SBI’s RACPC ‘ll do the back ground job.

Once SBI is ready to accept the transfer, it ‘ll issue you a sanction letter of the loan amount & ‘ll ask you to go for loan related agreement documentation work with SBI. If you are not having property insurance, SBI may ask to purchase one. Same ‘ll be the case for your life insurance. Once legal documentation is over, the cheque of the loan balance ‘ll be issued directly into the name of the bank in question. After the amount is credited to your existing bank, within next 20-30 days, you ‘ll get the original documents submitted by you, from the existing bank. Now you w’d have to submit these documents to SBI. In some states like Gujarat, Maharashtra, Karnataka, SBI may ask to go for registration of mortgage deed on your property in the office where your property was originally registered in your name. 

SBI Max Gain

Normal Home Loan

Liquidity of your part prepayments is there

No Liquidity. Money is gone for ever, once you prepay.

A bit complex to understand

Easy to understand

For people who can generate regular surplus amounts

For people who can only manage regular EMIs

Click here to know the real life example of Mr. Sudhir S for SBI Max Gain.

Do you feel, this article was able to answer your all queries related to SBI Max Gain? Was this article helpful for you to understand the overall concept of SBI Max Gain home loan? Please feel free to ask for more help

This article is written by Ashal Jauhari, who manages a great facebook group on investments and also is one of the most active and helpful member of our Jagoinvestor forum. This article was written by him and reproduced from this blog here

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680 replies on this article “SBI MaxGain Home Loan Review – With FAQ’s”

  1. Surya says:

    Will the interest that is accumulated for the surplus amount in over draft account is taxable?

    1. AnujPaulGosain says:

      Dear Surya

      You don’t earn any interest on Maxgain OD account. Hence, there is no question about interest on surplus being taxable.

      However, your interest outgo reduces in Maxgain OD account on the basis of the surplus amount. Which means that you cannot claim tax deduction on the saved interest portion as you have never paid this interest to the Bank.

      Regards
      Anuj

  2. Arun Kumar Shukla says:

    I have purchased under contruction property, which deliver to me on Dec,2017. I have parked 3L surplus on my SBI max gain Account.
    Can i claim as tax benefit under 80C as principle repayment.
    If No, how can convert this surplus amount to principle repayment to claim tax benefit.

    Please suggest

    1. No you cant claim it under 80C

  3. I could see that current rate of Interest for Max Gain is 9.15% for new joiners. For me it still says 9.35% which was decreased few months ago. Can you please confirm how to reduce my existing interest from 9.35 to 9.15% . Any help would be appreciated.

  4. sreekanth s v says:

    I consider this as one of the worst.
    Since they charge 4.8% for depositing into the maxgaining account. I transferred 16000 from my saving acc to OD account I ended up paying 710 rupees as charges.
    The interest rate doesn’t decreases when RBI decreases. You need to pay 0.567% of total loan amount to change the interest rate. Then the SBI MICLR rate will decrease to that’s all.

    1. Thanks for your comment sreekanth s v

    2. Mohan says:

      Do they charge 4.8% each time you deposit money to the Maxgain account, as Srikanth is saying. If so who will take Maxgain loan?

    3. AnujPaulGosain says:

      Dear srrkanth s v

      SBI doesn’t charge anything for deposits or withdrawals from Maxgain OD account. The Rs. 710 you have been charged must be for something else. Please verify your OD and SB account statements.

      All the banks and HFCs charge conversion fee for converting the spread. This is not unique to SBI.

      Regards
      Anuj

  5. BhushanA says:

    My Maxgain started from August my loan is 3545000, my available balance on 29Aug2016 was 430018, on 30th Aug2016 i removed 15000 from my Available Balance, So the amount in Available Balance became 415018, 31Aug2016 interest gone was 25189, on 3Sep2016 EMI gone was 29809. My ROI is 9.5 %. My DP is 3531000. My question is why my Available Balance is 406435 whereas it should be 415000 after my EMI on 3rd Sept?

    1. Looks like you need your bank to clarify on this.

      1. BhushanA says:

        Thanks for reply..will check.

    2. AnujPaulGosain says:

      Dear BhushanA

      Your calculation is correct but please check your OD account statement. It might be that SBI has debited loan/property insurance premium from your OD account.

      Regards
      Anuj

  6. Aztek says:

    Dear Sir,
    Appreciate your time and valuable advise you give to all the people here.
    SBI maxgain Homeloan amount 56lacs, EMI 55000 for 20yrs with current ROI 9.7%. Till date I have parked around 8lacs of surplus amount in my home-loan account in bits and pieces and not lump-sum. With my increased salary, I can park more amount than my EMI in my SBI Maxgain Home loan account. Current EMI 55000 and I can add 30000 more to it. Current outstanding is 53lacs excluding the 8lacs surplus amount.
    My Questions:
    1. Shall I withdraw the 8lacs surplus amount and deposit it back as a lump-sum, if so what benefit will it give me.
    2. Can i adjust it towards principal and reduce tenure? If so what benefit will it give me?
    3. Shall I increase my EMI to reduce the tenure? if so what benefit will it give me?
    4. Can I deposit lump-sum and increase EMI both at the same time and decrease my tenure? if so what benefit will it give me?
    4. Or I shall continue parking the surplus 30000 in maxgain account without changing the EMI?
    It would be very helpful to hear your valuable advice on my queries.
    Thanks in Advance
    Aztek

    1. AnujPaulGosain says:

      Dear Aztek

      1. Shall I withdraw the 8lacs surplus amount and deposit it back as a lump-sum, if so what benefit will it give me.
      A: It will not make any difference apart from from loss of interest saving on for the period for which you withdraw Rs. 8 Lakhs.

      2. Can i adjust it towards principal and reduce tenure? If so what benefit will it give me?
      A: If you part prepay the principal and reduce the tenure assuming you keep the EMI same, your principal component from EMIs will increase and Interest component will reduce by the same amount. However, there will be no impact on the actual interest that gets debited from your OD account. Plus, you will lose the liquid balance of Rs. 8 lakh that you have.

      3. Shall I increase my EMI to reduce the tenure? if so what benefit will it give me?
      A: If you increase your EMI, of course the tenure will be reduced. In this case the principal component in your first EMI after the increase will be stepped up by the amount of increase. The interest component will remain the same. But now since you will be paying more principal in every EMI, the interest component will start reducing at a faster rate.

      4. Can I deposit lump-sum and increase EMI both at the same time and decrease my tenure? if so what benefit will it give me?
      A: You will see both the effects as explained above.

      4. Or I shall continue parking the surplus 30000 in maxgain account without changing the EMI?
      A: That’s totally up to you. Key consideration is whether you want to retain liquidity or not. In my opinion, the best way is to continuously increase the surplus balance till it is equal to the principal outstanding. Thereafter, you can use the surplus balance to close the entire loan. Else you can maintain the surplus balance in your account equal to the principal outstanding. In second case, your net EMI becomes Nil as the interest cost is zero and principal gets paid from the surplus balance.

      Regards
      Anuj

      1. NishantJaiswal says:

        Thank you so much Anuj, This helps a lot. Appreciate your time and advise

  7. Prateek says:

    Hi Manish,

    I really appreciate your effort in helping the less knowledgeable folks like me in these financial matters.

    I have already opted for SBI MaxGain Home Loan, but unfortunately at the time of enrollment I went for 25 years duration. Is it possible to change the duration mid-way?

    Thanks for your help.

    1. If you change your EMI, the duration will automatically get calculated ! ..

      1. Prateek says:

        Thanks Manish. Appreciate the response.

        1. Glad to know that Prateek ..

  8. Apoorv says:

    Hello ,

    I just want to know , if it is good to close an existing MAX gain HL account ? I have surplus amount & i can pay it against outstanding loan amount . Will it be good/advisable to close this MAX gain account ?

    1. AnujPaulGosain says:

      Apoorv

      If your accumulated surplus balance is equal to the principal outstanding, you can withdraw exactly the amount of EMI that you will be paying every month. Which means that it becomes a zero cost loan.

      The decision that you need to take are:
      1. Do you want to pay off all the principal amount to close the loan and reduce your liquidity?
      2. Are you better off continuing with a zero cost loan. In this case, your withdrawals will be equal to the EMI and your accumulated balance will diminish to zero at the end of the loan team.
      3. Do you want to maintain liquidity that may become necessary for meeting exigencies.

      Please evaluate the above and then you should be able to take the right decision.

      Regards
      Anuj

    2. Yes you can do it !

  9. Arjun says:

    Hi,
    For under construction houses, does SBI Maxgain allow the option of tranche emi? This will mean that the EMI will be calculated based on the disbursed amount, not on the entire project cost.

    1. Hi Arjun

      This is very specific query which you should follow up with the concerned authority only. We wont be able to comment on that

      Manish

    2. AnujPaulGosain says:

      Arjun

      One of my friends has taken SBI Maxgain loan for under construction house. She had shared her account statement and amortization schedule with me for some guidance. I noted three things:

      1. She is paying full EMI calculated on the total loan amount.
      2. Interest being debited from her OD account is only for the disbursed amount.
      3. Principal is not getting debited from her OD account, and Principal deductions will begin next year.

      Due to the above 3 things, she has already accumulated above Rs. 5 lakhs in her OD account, which is a very good thing. However, she will not be able to withdraw this amount till she gets all the disbursements and the transaction rights.

      Your case might be similar to the above. For better clarity, please take the Amortization Schedule for your home loan from your branch.

      Regards
      Anuj

  10. AnujPaulGosain says:

    Raj

    The first explanation is the correct one.

    Regards
    Anuj

  11. Raj says:

    Hi Sir

    I kind of quite understood how max gain works after googling about it. I found two different versions of max gain account explanation regarding available balance and principal amount.

    1. The interest saved goes to the available balance. Principal is same as in amortization schedule. Tenure and EMI remains same.
    2. The interest saved reduces the drawing power. Principal is EMI – Interest debited for that month. EMI remains same, but tenure comes down.

    Which of these two is true? Or SBI has both of these versions?

  12. HanumaKishore says:

    Hello Sir,

    I have applied for Maxgain Home Loan of Rs.30,00,000 and it was approved and Rs.13,95000 has been disbursed to the builder. The property is still under construction and as I have opted for Full EMI, EMI is getting started from next month. There is Available balance of Rs.16,05,000 in my Maxgain loan account as this amount has not yet been disbursed to the builder.
    Now my question is if I park surplus funds in my maxgain loan account, will I get interest on the surplus funds? If yes, how much interest will I get?

    1. AnujPaulGosain says:

      Dear Hanuman

      SBI Maxgain account does not pay any interest on the surplus balance. Instead, the account “does not charge” interest on the surplus balance.

      For eg. if you have withdrawn Rs. 13,95,000 from the OD account as disbursement, your account be debited by the interest on Rs. 13,95,000. Now, if you deposit some amount, say Rs. 2 Lakh in the OD account, then your will be debited by interest on Rs. 11,95,000. So you will be saving (not earning) interest cost on the Rs. 2,00,000 that you have deposited as surplus balance.

      However, you can only deposit (and not withdraw) money in the Maxgain OD account till your disbursements are not complete. Hence, make sure that you deposit only the amount that you are very sure that you will not require till your disbursements are complete.

      Regards
      Anuj

  13. Pankaj says:

    I have home loan of Rs 25 Lakh, Amount of 24 Lakh is already transferred to builder. 1 lakh is remaining

    I have deposited rs 2 lakh to my OD account.

    I need to transfer the 3 lakh (1 lakh pending from full amount and 2 lakh from additional OD saving) to builder. Can I do that?

    1. AnujPaulGosain says:

      Pankaj

      Since your loan is not fully disbursed, you cannot withdraw the amount you have deposited in the OD account.

      You should ask your builder to give you a demand letter for Rs. 1 lakh. Get this amount disbursed. This will complete your disbursements for the home loan.

      Thereafter, you can get the transaction rights for your OD account from your Bank branch. After you get the transaction rights, you can issue a cheque in favor of the builder or directly transfer the amount to his account through NEFT/IMPS.

      Regards
      Anuj

    2. Hi Pankaj

      This is very specific query which you should follow up with the concerned authority only. We wont be able to comment on that

      Manish

  14. Manesh says:

    Hi Anuj,

    Whether available balance changes with drawing power? I could see that when my drawing power reduces, same amount get reduced from available balance. Can you please tell how this works?

    Thanks for your answer

    Best Regards
    Manesh

    1. AnujPaulGosain says:

      Manesh

      If you are not doing any transactions from the OD account, still the Available Balance will change.

      Let me explain step by step:

      1. Your Drawing Power at any time is the Total Principal Outstanding on your loan. It does not get impacted by the Available Balance.

      2. At the time of monthly EMI credit, your Available Balance increases to the extent of EMI deposit. Drawing Power remains as it is.

      3. When the Principal Component of the EMI is debited, your Drawing Power reduces (or you can say, the Principal Outstanding reduces). Your Available Balance reduces simultaneously to fund this Principal Component payment. This is the transaction that you are referring to.

      4. At the end of the month, the accumulated interest cost for the month is debited from your account. This is funded by your Available Balance and hence the Available Balance gets reduced to the extent of Interest Debited. This transaction does not impact your Drawing Power as you have already paid for the Principal Component in transaction no. 3 above.

      I have sent you my personal Maxgain calculator. Hope it helps. Let me know if need any help on that.

      Regards
      Anuj

      1. Manesh says:

        Thanks Anuj for the detailed explanation and sharing the Max Gain Calculator.

  15. Sagar says:

    Hello,
    I have SBI maxgain home loan. I have received surplus bonus 3 lac and want to park it in SBI Maxgain home loan account.

    Ques 1> If suppose I put this 3 lac in maxgain account I can withdraw it any time lets say after 1 month,1 year or 10 years? and after withdrawal the loan account will be have like normal and charge interest on entire outstanding? .

    Ques 2> There are absolutely no charges for withdrawal of this parked amount?

    1. Anuj says:

      Sagar

      If you have the transaction right for your SBI MAxgain OD account, you can withdraw your surplus balance anytime you want, either online or through cheque. SBI calculates interest on daily basis in Maxgain. The interest is charged on the Book Balance, which is equal to your total principal outstanding minus the Available balance in the OD account. Hence, after withdrawal of the entire Available Balance, you will be charged interest on the Total principal outstanding.

      Yes, there are no charges for withdrawal of the parked amount. It is your money and you can withdraw it anytime you want without incurring any charges.

      Regards
      Anuj

  16. Abhijeet says:

    Hi Anuj,

    I have transfer my Homeloan + Topup loan to SBI in Nov 2015. I have asked for SBI Maxgain account but bank provide me Term loan account. My total loan is 12,00,000+4,00,000. Is it possible to change account to maxgain and if yes what is the procedure.

    1. Anuj says:

      Hi Abhijeet

      Some months back, SBI has put a minimum Rs. 20 lakh loan amount condition for Maxgain product. That is why you could not get the Maxgain Home Loan. It will not be possible to change to Maxgain for this loan amount.

      Regards
      Anuj

      1. Abhijeet says:

        Thanks Anuj.

  17. Manoj says:

    Does online SBI OD Maxgain account shows the abount debit towards principle like it shows Interest Debit txn? how to know how much amount was adjusted towards principle.

    1. JayeshRane says:

      Just check your available balance at one day before end of month. On 1st date the available balance is reduced. Subtract the interest debited from the reduced balance. Thats it you get the principle deducted

    2. Anuj says:

      Manoj

      The best way is to get the Maxgain loan amortization schedule from your branch. This will give you the exact principal components in your monthly EMI from start will end of tenure.

      Regards
      Anuj

  18. Manoj says:

    Team,

    I hold SBI maxgain with amount 26,60,000 for 15 years. Approved in Mar ’16 EMI starting APR’16.As Loan was sanctioned in March last week I see debit int for 1 week extra aprt from April Debit int.
    Now only 1 EMI has completed,i see below pic.Not getting difference between Book balance and drawing Power. Also just to test the feature I deposited 500 Rs in OD maxgain account and expecting available bal as 500 Rs but its still 0 though txn present on OD as credit . Getting confused ,pls help.

    Book Balance -26,55,117.00
    Available Balance 0.00
    Limit 26,39,103.00
    Uncleared balance 0.00
    Drawing Power 26,39,103.00

    1. Manoj says:

      Pls help for above Query

      1. Anuj says:

        Hi Manoj

        I had replied to your query about 2 weeks back but somehow it did not get posted.

        It seems that the amount of interest debited from your OD account in Mar was less than the chargeable amount. You should immediately park about Rs. 18K in the OD account. Some of it would be debited towards March interest, depending on the date of disbursement and interest rate. Most likely this amount will be debited on last day of May if you deposit now.

        It would be better for you to maintain a SBI Maxgain Home loan calculator to be able to predict exactly how much interest you will be paying and saving every month.

        Regards
        Anuj

  19. SusantaSwain says:

    Hi,

    Can you please provide the max gain calculator? Also, if you have any traditional calculator with pre-payment option, please send to my mail address.

    Thanks,
    Susanta

    1. Anuj says:

      Susanta

      Please send me a mail on anujp03@gmail.com for the Maxgain calculator.

      Regards
      Anuj

  20. Ashok says:

    Hi Manish,
    I have told by SBI LOAN EXECUTIVE that regular loan account will be 9.40 % and sbi max gain will be 9.50%.
    Is it true ? Or should complain to head office ?

    Secondly, my property cost is 1 crore & loan amount is 70 lacs and will get possession by 2017 and partial disbursement will be done by May 2016.
    Can I put 30 lacs in sbi max gain now to lower interest amount and withdraw whole amount after possession in 2018 to buy another property ??

    1. Anuj says:

      Ashok

      Please check on sbi website for latest interest rates. The executive can not over or under charge you on interest rates.

      You can deposit money in OD account to reduce the interest cost. But please be aware that you will not be able to withdraw it till your disbursements are complete and you get the transaction rights.

      Regards
      Anuj

      1. Ashok says:

        Thanks soooooo much anuj !

  21. suryakant says:

    Hi,

    Suppose I had done some prepayement of 3 lacs to Maxgain account which I am able to see as available balance. Now, I want to purchase a car for which I need loan of 3 lacs. Is it good idea to use money from Maxgain account than to go for car loan (expensive by approx 2%)? so that I get tax saving on interest of this 3 lacs? Is it OK to do it this way?

    1. Anuj says:

      Suryakant

      Smart question!

      This depends on 2 things :
      1. Do you want to maintain a liquid balance of that 3 lakh rupees
      2. Your marginal tax rate

      This should be a pretty straight forward calculation.

      Regards
      Anuj

  22. anirban says:

    Hi – What would happen if i park suplus money in my savings account and not in my loan account here ?

    1. Anuj says:

      Anirban

      If you don’t maintain any surplus balance in your OD account, then you will be paying the full interest cost of the loan (minus the interest you will earn on savings balance).

      Regards
      Anuj

  23. Nitin says:

    Sir,

    Please let me know whether the same facility is available in State Bank of Patiala also. I have an existing normal Home loan account with State bank of Patiala. Can I change my normal account to maxgain account.

    Regards,

    1. Anuj says:

      Nitin

      SBP too offers a Maxgain type home loan.

      Regards
      Anuj

    2. I have no idea on that !

  24. MaheshPolkam says:

    Anuj ji
    Firstly thanks for the authentic and gigantic information on Max Gain. I hold MG account with SBI. I have taken loan of 46.6L in 2013Aug and the loan is still not fully disbursed as the property is under construction. My question is can i go for increase in sanction amount as my eligibility is now higher than what was sanctioned.

    1. Anuj says:

      Mahesh

      Changing the sanction amount is generally not possible in any home loan. And your loan disbursement has already started as per your agreement. But you can avail a top up loan if your loan amount eligibility has increased. Please first assess whether you need to increase your liability.

      Regards
      Anuj

      1. MaheshPolkam says:

        Will SBI give Top up loan before the full disbursal?
        I would need it because i need to pay for parking and furnishing.

  25. nbkashikar says:

    Dear Ashal,Anuj,

    This is Nikhi Kashikar. I have SBI Max gain loan account. Initially I was paying EMI of Rs. 31824/- from Nov-2013 to Mar-2015. From Apr-2015 I requested SBI to increase the EMI to Rs.42000/- thinking that additional EMI amount will directly go towards the repayment of Principal amount. They increased EMI and from APR-15 my saving account is getting debited by 42000/- every month. I thought this increased EMI amount of around 42000-31824 = 10176 will directly reduce the Principal amount. But this extra amount is just get deposited to OD account and not used to reduce the Principal component.

    Could you please let me know whether this extra amount in EMI should go to Principal or not?

    1. Anuj says:

      Nikhil

      This is one gap in the SBI Consumer loans, particularly in Maxgain. The system architecture it uses is much complex as compared to other home loans. Maxgain is a product where mid-term tenure increase/decreases are difficult to factor in as the system follows a fixed amortization of principal. Due to this, there are chances of such kind of omissions.

      I would suggest you to contact your RACPC. Let us what response you get.

      Also, In reply to your email, I am sending you my personal Maxgain calculator. Let me know if you have any questions.

      Regards
      Anuj

      1. nbkashikar says:

        Hi Anuj,

        Thanks for the reply. I will contact RACPC and update the response here.

        Regards,
        Nikhil

  26. Ganapathy says:

    Dear Anuj or Ashal,
    I am trying to figure this maxgain account stuff. I run two maxgain acounts. I understand that, if there are parked surpluses, while there is no change in the EMI value or the tenure of the loan, the interest savings on the parked surpluses are credited reducing your book balance and automatically increasing your available surplus anount. The same thing I understand happens when there is a downward fluctuation in the rate of interest too. However, I can t make out from the bank entries in the statement of acct. I do have the amortization schedules, but still it is hard to unravel. my questions are two- how do i know what exactly is my interest saving( i can do that from available xl sheets) and how can I monitor it? what happens when the interest rate goes up and I have no parked surplus. does the bank inform me? they surely did not when the rate went down!! Please help

    1. Anuj says:

      Ganapathy

      Let me first correct you in one very basic statement you have made. In Maxgain account, The interest savings are NOT credited to the account. Rather, the interest savings are NOT DEBITED from the OD account leaving a higher available balance at the end of the month than what it would have been if the full interest amount was to be debited.

      Good that you have got the Amortization Schedule from the bank. You can refer to the amortization schedule for the Principal Components that will be a part of your EMI every month. However, the Amortization Schedule will not help you in finding out the interest component as the interest part of EMI in Maxgain account depends on daily calculation of interest which in turn depends on the daily closing book balance and the applicable interest rate.

      This brings us to your next question on how to know what exactly is your interest saving. For this, you need to have a calculator that give you the daily interest cost of the loan and the daily saving to the last paisa. I can share with you the calculator that I have developed for my Maxgain account. You can refer to it to develop your own calculator. Send me a mail on anujp03@gmail.com

      Your last question: what happens when the interest rate goes up and I have no parked surplus?
      The answer is that in the Maxgain account, the monthly principal components and hence the tenure of the loan is not impacted by the interest rate changes (unlike other home loans). The only thing that gets impacted is the interest component. If the interest rates increase, although the monthly EMI transfer from your savings account will remain same, the interest debited from your OD account at the end of the month will be higher. Hence, it is always a good idea to maintain at least some surplus balance in the OD account.

      To know the interest rate changes you can visit SBI website and get historical rates. Any changes in SBI’s base rates are widely published in media.

      Regards
      Anuj

  27. rohit says:

    I’ve taken a home loan for under construction property and possession will be after 2 years.
    Question 1:
    I have surplus amount in SB account, which is the best option for me from below two options for payment?
    1) give the surplus amount directly to builder to avoid home loan interest.
    2) disburse from OD account and deposit surplus in OD account.
    Question 2:
    If I gave surplus directly to builder then what all document bank needs from me and builder?

    Question 3:
    Can I pre pay home loan from the surplus amount parked in the OD account before the final disbursement?

  28. Prasad says:

    Hi Ashal,

    I have few queries on Maxgain loan –

    1) As in case of normal loan Principal reduced each month is -> EMI – Interest, but is this formula not applicable for maxgain ? I checked with Branch Manager and he

    said it is not. Wanted to confirm, because in my case it shows some difference ( around 2-3 thousands each months – since EMI started )

    2) I am depositing surplus amount every month, and it seems after few years my book balance will be zero or positive, in that case what should be done ? shall I

    approach bank to close the loan ? Do they entertain such requests without extra charge ? My branch seems not agree on this. As per him if you withdraw Available

    Balance it will increase your outstanding amount ? I really dont understand his logic.

    3) What is more beneficial – Keeping surplus in OD account or repaying loan after certain intervals (say every 6 months) ?

    4) Is there any senior and responsible authority in bank with whom all the queries and calculations can be discussed ? As I discussed with many of bank persons and

    each of them have different views.

    5) Does top up loan and home loan have different tenure and interest rates ?

    6) Is it not mandatory to banks to send the amortization schedule to customers on their residential address ? My Branch manager says not it is not, and if we send you

    have to pay for the courier charges.

    7) Can I change my home loan branch near to my home ( Again branch manager sir saying it is not allowed )

    Please reply ………

    1. Anuj says:

      Prasad

      1) As in case of normal loan Principal reduced each month is -> EMI – Interest, but is this formula not applicable for maxgain ? I checked with Branch Manager and he said it is not.

      A: The Branch Manager is correct. The Principal component for every month is pre-fixed. However, the interest component cannot be pre-fixed in case of Maxgain. Hence, the formula will not work.

      2) I am depositing surplus amount every month, and it seems after few years my book balance will be zero or positive, in that case what should be done ? shall I approach bank to close the loan ? Do they entertain such requests without extra charge ? My branch seems not agree on this. As per him if you withdraw Available Balance it will increase your outstanding amount ? I really dont understand his logic.

      A: You can close the loan anytime you want. The branch manager is right but giving you half the story :).
      When you withdraw the Available Balance, your book balance will become negative. But when you use this amount to prepay the loan, your book balance will again become zero.

      3) What is more beneficial – Keeping surplus in OD account or repaying loan after certain intervals (say every 6 months) ?

      A: Both the options will have the same impact on the interest cost of the loan. In first option, you retain the liquidity with you. And in second option you lose the liquidity. In my personal opinion, it is better to build up and retain the liquidity till your Available Balance is equal to the principal outstanding and then close the loan if you not don’t need the money for any other investment.

      4) Is there any senior and responsible authority in bank with whom all the queries and calculations can be discussed ? As I discussed with many of bank persons and each of them have different views.

      A: You will have to get in touch with someone in your RACPC. Best of luck!

      5) Does top up loan and home loan have different tenure and interest rates ?

      A: Yes.

      6) Is it not mandatory to banks to send the amortization schedule to customers on their residential address ? My Branch manager says not it is not, and if we send you have to pay for the courier charges.

      A: The bank manager is correct. None of the banks or HFCs are sending Amortization Schedule to the customers. However, you can go to your branch and get a print free of cost.

      7) Can I change my home loan branch near to my home ( Again branch manager sir saying it is not allowed )

      A: Not sure. Please check with RACPC.

  29. Ravindra says:

    Hi Ashal,
    I need some clarification. I have a SBI Maxgain account. When I took SBI Max Gain Home Loan in Jan 2015, that time interest rate was 10.25%. Now interest rate in 9.45%.
    Drawing Power = 22,89,282.00
    Limit = 22,89,282.00
    Available Balance = 23,848.00
    Book Balance = -22,65,434.00
    Rate of Interest = 9.45%
    Lien Amount 0.00
    EMI = 20,440
    DEBIT INTEREST = 18,404.00 as per BANK Passbook
    I have paid 13 EMIs. Request you to kindly guide me on the issue as to why Drawing Power is not reduced as EMI is 20,440.00 and Debit Interest is 18,404.00.
    I want to know how much principle amount and interest amount paid at present.
    Thanks,
    Ravindra

    1. Anuj says:

      Hi Ravindra

      What was the original loan amount that you took? The Drawing Power should reduce every month if your principal deduction is taking place.
      You should request the bank to give you your loan amortization schedule. This will tell you the principal deductions for every month.

      Regards
      Anuj

      1. Ravindra says:

        Hi Anuj,

        Thanks for the reply. Laon amount was 23,00,000. I will ask for loan amortization schedule to the bank.

        Regards,
        Ravindra

  30. Mahesh says:

    hi Ashal,

    my requirement is only Rs. 15 lac. but to gain max-gain the min loan amount should be 20 lac. so is it a good option to go for 20 lac to be eligible for max-gain. my flat is under construction and likely will get possession by DEC-2016. so will a normal SBI home loan of 15 lac for 8 years or SBI max-gain of 20 lac for 15 years which option will be beneficial, I hope you got my query and will appreciate your feedback on the same.

    1. Anuj says:

      Mahesh

      If you want Maxgain Home Loan and can increase your eligibility; then you can go ahead and take Rs. 20L loan and deposit the extra Rs. 5L in the OD account. If your loan tenure and interest rate are equal to a comparable home loan product, your effective EMI outgo will be same if you withdraw the interest saving every month.

      However, if you keep these interest savings untouched in the OD account, your effective EMI will go on reducing every month as compared to an ordinary home loan product.

      Regards
      Anuj

      1. SRINIVAS says:

        Anuj
        I agree with you, if you withdraw the interest saving every month effective EMI outgo will be same. But whenever the amount in OD account is withdrawn, EMI will go relatively up as per my understanding. Kindly correct me in I am wrong.

        Regards, Srinivas

  31. Roby says:

    Hi Manish,

    Thanks for all your efforts here and he support provided is unmatched.

    My case is also not very unique – but another sbi max gain home loan – 30L, which was approved in apr’14 and paid interest for partial amount released till oct’14 and started the original repaying emi of 30k from nov’14, which is for 2o years. My query here are two fold:

    1. Availing Benefits of Max Gain OD account.

    a. Is the Max gain OD account same as the SBI account I opened for the HL purpose? Or is there any other account to be opened for this purpose? There is also a HL account No associated with my HL – does this suffice?

    b. If i park all my savings in the SBI – and save on my interest payable, will the applicable surplus interest be credited to my account? Or does this needs to followed up with bank? Or will they adjust to my HL amount itself?

    c. What would be the recommended way o track my SBI MG HL details ? I am no having any information on this – other than the emi deducted. With the RACPCs at SBI are not very customer friendly, I am looking at suggestions for managing my loan better.

    2. Floating Rates

    a. even when the interest rates are reduced drastically over last one year, my emi remains just the same? Is this the way it should be in a floating rate concept?

    b. When enquired with the bank, they advised that it would be adjusted later! Again the not-so-customer friendly atmosphere effect.

    thanks in advance,

    Roby Mahew

    1. Hi Roby

      This article was written by a 3rd person called Ashal. I myself dont have a deep understanding of this product. I suggest you raise with query with SBI itself to get a right answer

    2. Avik says:

      What will happen when lets say in current situation I have 15 L loan due principal left and I have kept 15L as overdraft how will the interest calculate then

      1. Anuj says:

        Avik

        Please read my reply to Ansh 2 posts below. You will get the answer.

        Regards
        Anuj

    3. Anuj says:

      Roby

      1. Availing Benefits of Max Gain OD account.

      a. Is the Max gain OD account same as the SBI account I opened for the HL purpose? Or is there any other account to be opened for this purpose? There is also a HL account No associated with my HL – does this suffice?

      Maxgain OD account is different from Savings account. Please check your account description by logging in online. Does it start with “SBI H L MAXGAIN OD”? If yes, this is the Maxgain OD account.

      b. If i park all my savings in the SBI – and save on my interest payable, will the applicable surplus interest be credited to my account? Or does this needs to followed up with bank? Or will they adjust to my HL amount itself?

      Your interest already gets parked in the OD account every month with the EMI. The interest debited from your OD account at the end of every month will be less than this parked interest in case you park your savings in the OD account. To state simply: The saved interest gets ‘credited’ is a wrong statement. Rather, it does not get debited from your account.

      c. What would be the recommended way o track my SBI MG HL details ? I am no having any information on this – other than the emi deducted. With the RACPCs at SBI are not very customer friendly, I am looking at suggestions for managing my loan better.

      The best way to track your loan account is to first get your loan amortization schedule from the bank and then manage your own Maxgain home loan calculator. I can share with you the Maxgain calculator that I have prepared for my loan. You can use that to develop your own loan calculator. Send a mail to me on anujp03@gmail.com in case you want the calculator.

      2. Floating Rates

      a. even when the interest rates are reduced drastically over last one year, my emi remains just the same? Is this the way it should be in a floating rate concept?

      Yes, this is the way it works in floating rate concept.

      b. When enquired with the bank, they advised that it would be adjusted later! Again the not-so-customer friendly atmosphere effect.

      The bank people did not provide you the right information. In Maxgain Home Loan, when the interest rates reduce, you simply get a lower interest debited from your account while the EMI remains the same. Which means that effectively you are paying lower amount per month towards the loan than if the interest rates had not reduced. The difference or the savings are getting added to your available balance and you can withdraw them anytime you want.

      Regards
      Anuj

  32. anshudeep says:

    Hi,

    My latest SBI MaxGain Home Loan details are as follows:

    Description SBI H L MAXGAIN AUG12
    Book Balance -21,37,347.00
    Available Balance 0.00
    Limit 21,24,280.00
    Uncleared balance 0.00
    Drawing Power 21,24,280.00
    Currency INR
    Rate of Interest (% p.a.) 9.55%
    Lien Amount 0.00

    I can see there is a difference ( Rs. 21,37,347(BB) – Rs. 21,24,280(DP) = Rs13,067) between the Book Balance(BB) and Drawing Power (DP).

    On inquiring about this difference at the SBI RACPAC office, I was told that I have an outstanding Arrears towards interest and I need to pay this amount i.e Rs 13067 (apart from the ongoing EMI) with immediate effect to avoid extra interest charges. I was told that since I had done a part payment of 5 Lakhs in the past (1 year back where DP was deducted with 5lakhs) and EMI has changed, due to which the arrears on interest has come up. I was surprised to know this because I have been paying the EMI on time without fail and since doing part payment is absolutely free this should not have happened. Even after repeatedly asking for a detailed explanation I didn’t get a convincing answer.

    Please find below my queries in this regard:

    1. I would like to know the reason for this difference in Book Balance and Drawing Power. As per my knowledge. Book Balance= Drawing Power – Available Balance (Rs. 0 as full amount has been disbursed and I have taken the possession as well) that makes Book Balance = Drawing Power.
    2. Do I really need to pay this Arrears (of Rs 13,067/-) or there is some issue with the calculation?
    3. In case I have to pay it do I to visit the branch and pay or i can just do an online transfer of money from my linked SBI savings account?
    4. There was just one instance that due to insufficient funds in my salary account the EMI was not debited. On inquiring from the SBI bank, I was told if you pay the EMI within the same month no charges/penalty will be levied. Hence, i immediately transferred the EMI (along with SLOP CHARGES+ECS returned penalty = 1275) within the same month (in fact within 7 days) . Could this be a reason of the Arrears towards interest.

    Thanks in advance.

  33. Ansh says:

    if I take a loan of 40L and have 40L surplus (which I need next year ) does that mean that for the time period I have 40L in my OD account my entire EMI will be toward my principal ?

    1. Hi Ansh

      This is very specific query which you should follow up with the concerned authority only. We wont be able to comment on that

      Manish

    2. Anuj says:

      Ansh

      You are incorrect. Your book balance will be zero if your Available Balance and Limit are both equal to Rs. 40L. The principal reduction will be as per the amortization schedule only. Lets say, your EMI is Rs. 38,000 and the principal amount to be deducted in a particular month is Rs. 8,000. In this case Rs. 8,000 will go towards principal, Rs. Nil will go towards interest and the remaining amount, i.e., Rs. 30,000 will be added to your Available Balance.

      At the starting of next month, your statement will look like this:
      Limit (Principal outstanding): Rs. 40L – Rs. 8K = Rs. 39,92,000
      Available Balance: Rs. 40,30,000
      Book Balance = Rs. 0

      Now you have saved Rs. 30,000 as interest cost during the previous month. Also, your Available Balance exceeds your Limit by Rs. 38,000. You should withdraw this amount from the OD account as this is more than the principal outstanding and even without this money in the OD account, you will be paying Nil interest in the current month.

      Regards
      Anuj

  34. Aditya says:

    Hello,

    I have taken SBI Max Gain Home Loan and have been leveraging the benefits judiciously. However, I am looking to reduce my EMI outgo without increasing the tenure. Is it correct to say that only way to achieve is by pre-payment.

    What is the process for the same?

    Thanks,
    Aditya

    1. Yes, thats the only way !

    2. Anuj says:

      Aditya

      Just by parking money in Maxgain OD account you can reduce your EMI outgo. Since you will be charged interest on the principal amount after deduction of your available balance, your effective EMI outgo will be lesser than the scheduled EMI.

      Thanks
      Anuj

  35. Kunal says:

    Hello,

    I have 2 questions:

    1. Can I transfer my home loan from another bank to SBI MG even if my existing loan with other bank is not fully disbursed?

    2. At the time of transfer of loan from other bank to SBI MG, can I apply for higher loan amount then existing? What would be the additional requiremnets for that?

    Regards
    Kunal Oza

    1. 1. I am not very sure on that

      2. Unless you are eligible for higher loan, you will not get it .

  36. Ritesh says:

    Dear Manish,

    I have a question on my Max-gain account. I had taken a moratorium period of 18 months for the loan. Now, after that period ended and EMI started as SI to max-gain account, I am seeing that the Drawing Power/Principal is not reducing and it still is at the maximum amount. However, the Available balance is increasing by an amount = EMI – Interest Debit.

    On calling SBI, they are saying that first the interest calculated in the moratorium period will be recovered and then the Drawing power will start getting reduced.

    Please let me know if this is a right explanation or there is something missing here. Thank you for your help!

    1. Hi Ritesh

      This is very specific query which you should follow up with the concerned authority only. We wont be able to comment on that

      Manish

  37. cvs says:

    I do not want to park money on the SBI maxgain account because I do not want liquidity of that amount. I just want to bring down the loan principal forever by doing prepayment. This is because parking money will just save some interest for me but prepayment will bring down the principal and will be more beneficial eventually.

    I gave the cheque worth Rs 2 lacs to the bank for prepayment purpose. But when I checked the account, that amount was seen in the “Available Balance”. This means that my loan principal is not reduced forever; the money is just parked there.

    The officials in the SBI are now saying that I cannot do prepayment unless I am going to pay more than 20% of the principal amount. And they are saying that prepayment can be done only twice in the entire tenure. Is it correct or SBI is misguiding me?

    If this is the case, how come Max Gain is beneficial for those who can prepay the loan once in a year or so? When i transferred my loan from HDFC to SBI, I was told that prepayment is allowed.

    1. Hi cvs

      This is very specific query which you should follow up with the concerned authority only. We wont be able to comment on that

      Manish

    2. sunil says:

      CVS, what you are complaining, that’s the basic advantage of MaxGain. You prepay but if needed you can change your mind ! What is principal ? The amount on which interest is charged. In conventional Loan account it is called “principal”. But in MaxGain it is called “Book Balance” . It doesn’t really matter what name you call it – it is the outstanding principal amount that is going down with prepayment.

  38. PG says:

    Suppose i have loan of 15 L and i want to prepay 4 L which will directly deducted from principal amount. I don’t want to use max gain for this. Then is it possible? or are there any rules for prepayment?

    1. Anuj says:

      Dear PG

      You can make prepayments of SBI Maxgain Home Loan just like any other ordinary home loan. Speak to your Branch Manager.

      Regards
      Anuj

    2. Yes, you can use any bank loan and make prepayment. It will reduce from the principle amount

  39. Ghouse says:

    I had taken a SBI Max Gain Home Loan in 2005. Now, in 2015, when I want to close the home loan account and visited the bank, I was given a shocking treatment. They said, my home loan interest should have reset every 3 years and they didn’t do it. Now, they need to retroactively increase interest rates to 13% from 2008 and 13.5% from 2011 and I’ll have to play this additional interest to close the account. No intimation through the years. I have each recieved a statement from the bank stating the interest rate, amount of interest paid every for income tax purposes. It clearly stated the interest charged. Now suddenly they want to charge higher interest retroactively. If I had any intimation of the increase, I would have closed the loan much earlier. Can SBI increase interest rate retroactively?

    1. I think this is unfair. Complain to banking ombudsman on this

    2. Anuj says:

      Dear Ghouse

      Whoever said this to you probably is a junior level staff and doesn’t know how banking works. SBI Maxgain Home Loan interest rates are NOT reset every three years but immediately on the date of change in SBI’s Base Rate. You should give a written complaint to SBI RACPC Chief Manager with remedy sought, take a copy of the your complaint letter and get an acknowledgement of receipt. I am sure your problem will be resolved without any hassles.

      Regards
      Anuj

    3. Sunil says:

      You must read the loan agreement. Note that in 2005 it was PLR based interest rate and loan is always driven by the mutual agreement between you and bank. “Base rate” system introduced on 1st July 2010. You cannot challenge the bank decision if it is clearly written in your loan agreement about resetting the interest rate after every 3 years. The bank is legally correct. But, you can complain about defective service given by bank since they made a mistake in your calculation. You also have a valid point to argue that you could have totally prepaid the loan if you were not mis-informed. So do not argue if you find the terms in your agreement , put more focus on bank’s mistakes and not on validity of charges.

  40. archana says:

    Hi,

    I have a question on the sbi OD account and SBI loan account.

    I transferred rupees 20k from my SBI saving account to SBI OD account.
    This is what happened

    19814 was deposited in my OD account
    186 was deposited in my SBI loan account(max gain suraksha account)

    why is this?

    Is this gone happen ever time you transfer money from your saving account to your OD account??

    Thanks,
    Archana

    1. Hi Archana

      I am not very sure on this. This is specific to SBI itself and you should ask about it from them

  41. Chandan says:

    Hi,

    Can I link my SBI e-shield term insurance instead of a new property insurance required for SBI max Gain home loan?

    Thanks,
    Chandan

  42. rams says:

    I have a quick question on MAX GAIN. EMI = Principal + Interest. When I load a surplus amount on Max Gain OD account, it will reduce the interest rate. In this case, my EMI should come down. If the bank is taking the same EMI from ECS then the tenure has to come down. so, as a Max Gain user, I will get benefit either in EMI or in tenure. Am I right? Please clarify. Also, how can I check my tenure in SBI MG OD account? I am not finding tenure related details on my OD account statement.

    1. Anuj says:

      rams

      In Maxgain, the actual EMI DOES come down. The bank takes same EMI every month through ECS as you have mentioned. This amount, net of principal reduction for the month stays in your OD account till the end of the month. On the last day of the month, the applicable interest is debited from your OD account. The remaining amount (interest saving) stays in your OD account and adds to the surplus balance that you already have.

      So, although you will see same amount being taken as EMI every month; effective sum of principal and interest will be different from EMI. This difference stays in the OD account and is available for withdrawal anytime.

      Regarding tenure, in SBI Maxgain, the tenure doesn’t change with change in interest rates. So it’s kind of a hybrid account where interest rate are floating but the tenure is fixed.

      Regards
      Anuj Paul Gosain

    2. Hi rams

      This is very specific query which you should follow up with the concerned authority only. We wont be able to comment on that

      Manish

  43. ANIRBAN says:

    I have taken SBI Maxgain Homeloan. But finally I have taken disbursement of little lesser amount than the initial loan amount sanctioned. Now, after taking possession of my apartment when I asked SBI branch for transaction rights, they are saying I need to get the limit reduced to actual disbursed amount and only after that they will provide the transaction rights. I wrote an email to SBI RACPC but no response. I am out of town now, hence please suggest what I can do to get the transaction rights.

    1. Anuj says:

      Anirban

      You have two options:

      1. Get the limit reduced as suggested by SBI, which should normally not take a lot of time if you follow up regularly.
      2. Get the full disbursement somehow. With this you will get the transaction rights, and extra amount that you will get will be your liquid balance that you can keep in your OD account or use elsewhere.

      Regards
      Anuj

    2. Hi ANIRBAN

      This is very specific query which you should follow up with the concerned authority only. We wont be able to comment on that

      Manish

  44. NIKHIL says:

    HI,

    I have taken 15L loan from SBI in MAx Gain Account. I have started to pay EMI from Last yest September 2015. Now after end of financial year I recevied interest certificate for account as below :

    Repayment towards Principal Rs. : 30816.00
    Repayment towards Interest Rs. : 82005.00
    Repayment towards Charges Rs. : 0.00
    ————————————
    Total Repayment Rs. : 112821.00

    But if we count from September to April I have Paid (16300 x 8 month) = Rs. 1,30,400.00
    So there is gap of Rs.17579
    Can you explain me what is this?
    Or is Bank has make mistake

    1. Anuj says:

      Nikhil

      The payment towards principal in SBI Maxgain account is as per the original amortization schedule. The amount of Rs. 17,579 that you see as difference in EMI and total repayment is partly interest saving which happens by itself because normally a customer’s EMI date does not match with interest debit date. Some portion of this is also principal amount since principal amount to be debited from the OD account changes every month as per the amortization schedule.

      You should see a surplus balance in your OD account of at least Rs. 17,579 which you can withdraw anytime. That’s the beauty of maxgain!

      Regards
      Anuj

    2. Hi NIKHIL

      Thanks for sharing your health insurance requirement. I think the best think you can do is leave your details at https://www.coverfox.com/jagoinvestor . And you will get a expert assistance on selecting and buying the right policy for you.

      You can then take the decision.

      ManishHi NIKHIL

      I suggest that you now take the RTI route. You can file the RTI and ask your queries to them. THey are bound to reply you on your queries.

      Its a bit long cut, but works well

      Manish

    3. Hi NIKHIL

      I suggest that you now take the RTI route. You can file the RTI and ask your queries to them. THey are bound to reply you on your queries.

      Its a bit long cut, but works well

      Manish

  45. Saurabh says:

    Hello Madam,

    I have taken a loan of 30 lakhs starting October 2013 in SBI Max Gain scheme. My flat is still under construction but I had started paying full EMIs which is Rs. 27,214. Its for a tenure of 30 years. Right now, I’m in a position to pay Rs. 35,000/- so I am thinking of transferring extra (35,000-27,214=) 7,786 every month to my loan account from my savings account. I was under the impression that this 7,786 will reduce my principal directly. But after reading your column; I’m confused! If it will not reduce either the principal or EMIs then what’s the point of parking extra money in this loan account ? Besides, is there any other way I can use this Rs. 7,786 per month to reduce my loan so that I end up paying somewhat lesser after 30 years? Can I increase my EMI permanently and reduce my tenure to, say, 20 years?
    Please guide.

    Thanks in advance,
    Saurabh

    1. I think you are mistaken. This extra money will get deducted from your loan outstanding . Check it up with SBI also

    2. Anuj says:

      Saurabh

      If you park the extra amount of Rs. 7,786 it will reduce your EMI but not directly. This amount will get accumulated in your OD account as surplus balance. The daily interest on loan in SBI Maxgain is calculated on the outstanding balance less surplus balance. Which means that you will be saving interest on a daily basis. At the end of the month, only the thus calculated interest will be deducted from your OD account. The remaining amount will add your surplus balance which means that following month you will be saving more interest per day. If you park the extra amount every month, the effect will be compounded! This way, you can rest assured that you will be paying not somewhat, but significantly lesser that you would have originally paid over the tenure of the loan.

      Regards
      Anuj

  46. Prems says:

    Hi,I have taken SBI realty loan for purchasing plot.As per SBI Realty loan do I need to complete the construction with in two year or only the commencement of construction should be in two year?.I taken realty loan from SBI on Aug 2013 and now I started the construction .But completion will take another 6 or 7 months.In this case it is allowed to run with existing interest rate for realty loan or they will increase the rate.Anyone please clarify

    1. Prems , its very specific query about SBI rules, please check with them

  47. AnujPaulGosain says:

    Sunil

    1) Since the property is under construction and will take 3 yrs and in case of Max gain, you can’t withdraw the surplus money till full disbursement, don’t you think the normal loan product would be better as we can repay principle amount thru pre payment.

    in Maxgain, one should ideally not deposit surplus money in OD account since I can not be withdrawn till full disbursement is completed. Even in normal home loan, most of the lenders discourage customers to do prepayment before full disbursement. Discuss with you other lenders and get this clarified before taking a decision.

    2) If I get the surplus amount regularly and I am ok to do the pre payment without requiring that money back. Under this situation, which is better? Max gain or Normal Loan?

    Even in the case of Maxgain, one can do prepayments just like in any other normal home. In Maxgain, you have option of retaining liquidity while normal home loans do not have this option.

    3) In Max gain Product, does the interest rate change if the lender changes it’s base rate? or is it fixed?

    The interest rate is floating as changes with the change in base rate.

    Regards
    Anuj Paul Gosain

  48. Sunil says:

    Hi,

    I have purchased a under construction home. Now, I am in a process to evaluate the better loan. I went the forum to understand the pros and cons of SBI Maxgain Product. But I have couple of questions which would help me in proper decision making.

    1) Since the property is under construction and will take 3 yrs and in case of Max gain, you can’t withdraw the surplus money till full disbursement, don’t you think the normal loan product would be better as we can repay principle amount thru pre payment.

    2) If I get the surplus amount regularly and I am ok to do the pre payment without requiring that money back. Under this situation, which is better? Max gain or Normal Loan?

    3) In Max gain Product, does the interest rate change if the lender changes it’s base rate? or is it fixed?

    Regards,
    Sunil.

    1. Hi Sunil

      This is very specific to Max Gain and I dont have this much understanding of it !

    2. DineshKamath says:

      I am answering your questions based on my little knowledge. However please confirm this with SBI (better with a chief manager of SBI RACPC rather than SBI branch)

      Answer to Question 1:
      You can’t withdraw any amount that is parked during construction phase. However i am not sure if it is to do with full disbursement or registration of your property. I think if can activate the max gain to withdraw once you register the property (you might be able to say pay the builder from your own hand during registration even without taking full disbursement from bank). However please check with SBI

      Answer to Question 2:
      You can park any amount. However i think whatever additional amount you park can be applied for prepayment too. In this case Max Gain is always better. However again please check with SBI

      Answer to Question 3:
      Yes when base rate changes it gets reflected on your max gain home loan too.

  49. Anuj Paul Gosain says:

    Milan

    You can get a top-up, but only after you take 100% disbursement and take possession of the property.

    Regards
    Anuj Paul Gosain

  50. Milan says:

    Hi,

    I have taken SBI Maxgain for home loan of for a home of 50 Lakhs. The bank has approved 40 lakhs (80%). Out of 40 lakhs, the bank has already disbursed 30 Lakhs. The flat is under construction and about to complete. Now can i get an additional loan of 3-4 lakhs for interior and woodwork as a top up to the homeloan. Does SBI provide this with similar interest rate. Really appreciate any help.

    1. I am not aware of this .

      Manish

  51. Anuj says:

    Pandian

    Technically, you don’t earn any interest by keeping surplus funds in Maxgain OD account. It’s just that the bank does not charge you interest on amount equal to the surplus funds. So, rather that interest earned, it is interest saved and hence the question of tax being payable on this does not arise.

    Anuj Paul Gosain

    1. Thanks for your comment Anuj

  52. Pandian says:

    When you park the surplus fund in maxgain account, Will the interest you are earning for this surplus fund is taxable? Otherwise is there any limit of tax exemption.
    In normal circumstances you are exempted only up to Rs. 2.5 lac as housing loan interest payment. If there is tax exemption for maxgain account interest, It could be much higher.

    1. Thanks for your comment Pandian

  53. Anuj says:

    Deepak

    Your understanding is correct. After conversion, your spread will be reduced. You should go for it since your loan amount is much above average and still very new. While you do the conversion you can either get your loan tenure or your EMI reduced.

    Don’t know much about charges. Please check with your Branch.

    Regards
    Anuj

  54. Deepak says:

    Hi,

    I had taken SBI Maxgain home loan in October 2013 for a new flat purchase in Mumbai. The loan amount was Rs 69 lakhs. It was a floating rate loan for 20 years tenure. That time the base rate was 10.00% and the additional spread they charged me was 0.40% (amouting to a total of 10.40% then). After that, there were some revisions in SBI base rate. As on today, the base rate has been reduced to 9.85%, and hence my SBI loan account shows my current interest rate to be 10.25% (my understanding is 9.85+0.40=10.25%).

    But, now when I look at the SBI website (https://www.sbi.co.in/portal/web/interest-rates/home-loans-interest-rates) and also when I spoke to the SBI call center representatives, the below is the understanding I get:

    New SBI Maxgain account interest rate for Rs <1 cr loan will be 9.90%. Only above Rs 1 cr, the interest rate applicable would be 10.15%. Does this mean that if I convert my home loan to this new home loan (and since my home loan would be for less than Rs 1 cr), my interest rate would decrease from current 10.25% to 9.90%? Also, does this mean that the spread on my new loan would be only 0.05% (i.e., 9.85+0.05 = 9.90%)? Is my understanding correct?

    Secondly, any idea on what would be all the charges I will have to pay for conervting my loan to this new loan? And can any of these charges be waived-off by SBI? Also, what is the timeline that this conversion process takes?

    Thanks in advance for helping with my understanding.

    Regards,
    Deepak

    1. Hi Deepak

      The case is complicated enough and I think you should meet the branch manager to discuss this and get clarity !

  55. Anuj says:

    Parul

    Available Balance is the positive balance in the OD account. This is your money that you can withdraw anytime if required. You do not pay any interest on the Available Balance. Rather, a positive Available Balance helps in saving interest cost.

    Regards
    Anuj

  56. Amaresh says:

    Hi Manish, Ashal
    I have taken a home loan max gain for 20 year duration. I am parking surplus amount in the OD account in every 3-4 months. What I understand is, this reduces the interest liabilities.
    Now my query is- should I convert my home loan to a shorter duration(like 15 yr) ? If yes, then what benefits would I get ?

    1. I think you will save on the interest part a lot. So if you have the capacity to service a higher EMI , go for it

  57. Parul says:

    The Available balance column of my max gain shows Rs. 3,53,542.00. Am I paying interest on this or is it harming me in anyway?

    1. I am not very clear on that

  58. Anuj says:

    Anuj J

    Your question is difficult to answer. Can you please find the answers from your RACPC and also let us know.

    Regards
    Anuj

  59. Anuj J says:

    Hi there,

    I have a question around the Full EMI SBI Maxgain loan.

    I have an approved loan of 35 Lacs under SBI H L MAXGAIN OD Plan.

    My Property will be built by Dec 2017 and at this point I need partial payments from SBI as I can help with the rest of the amount every 2 months.

    So, in this scenario – imagine I just take 1 Lac from SBI, how would they calculate the emi everymonth and in case they recover the entire amount I have taken or I may not want further emi’s from them for another 8-9 months, then how would this work..

    So, I take 1 Lac on May 2015 and I don’t want any further payments till Jan-2016 from SBI,

    Can you help with this scenario ?

    1. Hi Anuj J

      The question asked by you is beyond our scope.

      Manish

  60. Anuj says:

    Prems

    It does not matter how many loans you take for purchasing or constructing a property.

    Regarding tax benefits, please refer to this webpage for a good summary:

    http://www.charteredclub.com/tax-benefit-on-home-loan/

    Regards
    Anuj

  61. Prems says:

    Hi,
    I took SBI realty loan with a condition of starting construction with in two year as per the terms i started the construction by availing one more home loan.Construction will complete by oct 2015,Do i eligible to claim tax benefits for both the loan for this financial year itself?

  62. Anuj says:

    Manoj

    Clearly there is a difference between the supposed amortization of your loan and how the accounting is happening in your loan account.

    Probably the SBI system assumed a 3 year moratorium on your loan. If that is the case then no principal deduction would have happened from your OD account in the first 3 years.

    What I would advise you is:
    1 Get your loan amortization schedule. You can place request for it through SBI netbanking website in customer care section. All such requests are treated as complaints against the branch and your branch manager will have to give you the schedule to close the ticket.

    2. Prepare a calculator for your loan. I can give you the calculator that I have prepared for my loan and you can use it to develop your own calculator. This will help you know the exact interest that you save on a daily basis and determine the Drawing Power and other figures month by month. Send me a mail at anujp03 at gmail dot com. You will also need (a) your OD account statement from beginning till date and (b) applicable interest rates history that is available on SBI website.

    Once you prepare you own loan calculator, you will be armed with the power of information that you don’t have right now. And then you can go and deal with the SBI officials in more commanding terms.

    Let me know if you need any help in preparing the calculator.

    Regards
    Anuj

    1. manoj_info says:

      Thanks Anuj for feedback.

      1. Account statement shows that outstanding principal amount is reducing everything and is inline with whatever principal payment i have done in last three years. Only drawing power doesnt reflect it.

      2. I sent a request through online SBI for getting amortization schedule.

      3. I have sent a mail to your email id for calculator.

      Regards
      Manoj

  63. Anuj says:

    Manoj

    How old is your loan? The loan certificate is for FY2014-15 or for FY2015-16?

    I am assuming that your loan is very new and that you may be referring to the Provisional Certificate for current financial year. If both these assumptions are true, then you will see the Drawing Power amount of Rs. 30.3 lakhs at the end of current financial year.

    However, if either/both the assumptions are incorrect, then you can ask your branch manager to give you the amortization schedule for your loan. This schedule will give you the exact monthly principal components in your EMIs and you will be able to see if there is actually any anomaly in your Drawing Power amount.

    Regards
    Anuj

    1. manoj_info says:

      Thanks Anuj for the feedback.

      My loan is more than three years old and I occupied property 3 years ago. Full EMI deduction are in progress from last three years and I have certificates from bank regarding the same which clearly tells me total principal that has been paid in last 3 years (close to 1.2Lakhs)

      I called up the SBI Branch manager which issued loan to me just now. Initially the branch manager was not even willing to accept that there is any problem. Its the same typical “I dont care even if you are a customer” attitude. When I explained him the scenario, he understood that something is wrong and he asked me to send a written mail for the same. But seriously, it takes lot of effort to convince SBI managers. They are so-confident about their software.

      Anyways if it turns out that Drawing Power getting reflected in Bank software is wrong, where is the loss for me ? As far as I understand, interest is calculated on (Drawing Power minus Available Balance), so effectively I have paid interest on a much higher amount. And I dont know for how long the drawing power is not updated. There is only a difference of only 20 thousand in Drawing Power and sanctioned loan as of today which means the Drawing power is not updated for a very long time.

      Any suggestion on how to adjust the extra interest that I had paid to bank for no fault of mine.

      Thanks
      Manoj

  64. manoj_info says:

    Hi Manish,

    Thanks for the great article. This is my first day at jagoinvester and after reading couple of your articles, now i am a permanent follower of jagoinvester. Your articles are like magnets. Thanks from the bottom of my heart.

    I quickly looked into my SBI max-gain account and found something fishy:
    My sanctioned loan amount was 31.5 Lakhs. I have already paid principal amount of almost 1.2 Lakhs till date through regular EMI’s. I have certificate from bank regarding this payment of principal amount. Going by the definition of Drawing Power, the drawing power amount as of today should be 31.5L – 1.2 L which is equal to 30.3 Lakhs. But my Drawing power is shown as 31.28Lakhs. Am I missing something here ?

    Book Balance -19,51,409.00
    Available Balance 11,76,718.00
    Limit 31,28,127.00
    Uncleared balance 0.00
    Drawing Power 31,28,127.00
    Currency INR
    Rate of Interest (% p.a.) 10.15%
    Lien Amount 0.00

    Thanks
    Manoj

    1. Hi Manoj

      I am not very clear about it . I suggest mailing your SBI team on this and getting clarity

  65. Anuj says:

    Rahul

    There is no limit on the amount that you can deposit in your OD Account.

    But please keep in mind that your interest saving will be only on Rs. 4 lakh that is the amount outstanding on your loan. You will get 0% interest on the additional Rs. 16 lakh that you deposit. So, it doesn’t make any sense to deposit amount greater than the Drawing Power (Rs. 4 lakh in your case).

    Regards
    Anuj

  66. Anuj says:

    ICEMAN

    Foreclosing a Maxgain Home Loan (or any loan for that matter) is a personal decision. Some factors that one should consider before taking this decision are:

    1. A loan foreclosed is closed for ever. No more liability to pay to the bank in future.

    2. Your personal credit limit increases by the amount you have foreclosed.

    3. Loss of liquidity, Maxgain essentially helps increase liquidity. The amount accumulated in OD account over a period of time can be utilized for other investments (buying another property) or big planned expenditure (child education, marriage, etc).

    4. Loss on tax savings. Home loan is a good loan in the sense that one can get tax exemptions on principal and interest paid. Once a loan is foreclosed, these exemptions are no longer available.

    Think about all these things before taking any decision regarding foreclosure.

    Regards
    Anuj

    1. Iceman says:

      Thanks for the reply Anuj.. I do understand the bit about personal decision. I was solely curious to know from the financial benefit point of view. I think the biggest advantage one normally associates with foreclosing a loan is to save the interest outgo which is almost always equal(if not greater) than the principal. With MaxGain and parked surplus if that interest outgo is being saved , then this reason is no longer valid. Isn’t it ?

      One more query – My MG loan was fully disbursed on 4/4/2015. I have got the latest amortisation schedule from the bank now. If I wish to determine the saving , I just need to compare the interest highlighted in the amortisation schedule with the interest posted on my MG account on the last working day of month. Is this the right understanding ?

  67. Rahul says:

    I had taken 40L home loan under SBI max gain. Today my total outstanding remaining is just about 4L (I have paid (36L already) over past few years. I learned that SBI max gain account works as an OD account and I can deposit my additional saving in the account to bring down the interest part of the EMI.
    Is it possible for me to deposit more money than the actual remaining amount of home loan? For example, can I deposit a cheque of 20L in my SBI account today? Please note that my total outstanding is just 4L for the home loan account and I want to deposit 16L extra (20-4L).

    1. Did you check the full article. I think its already discussed !

  68. Iceman says:

    First of all , thanks for this informative article.

    My query is – with the benefit of interest offsetting in MaxGain account , does it now make any sense to foreclose MG home loan ? At the end of day , any surplus parked aside is earning us interest at 10.15% (home loan interest rate) at the very least ?

    Is this correct understanding or am I missing something really simple ?

    1. I am not very clear of this .

  69. Anuj says:

    Sourav

    PLEASE RE-CONFIRM IF THE ABOVE CALCULATION IS CORRECT.

    Conceptually, you are absolutely wrong. See the steps below:

    1. Lets say on 1st of the month you parked Rs. 2,00,000 in your OD account. Which means your Drawing Power (DP) = Rs. 34,00,000, Available Balance (AB) = Rs. 2,00,000 and Book Balance (BB) = Rs. 32,00,000

    2. You have to still deposit the EMI, right? Let’s say you deposit this on every 10th of the month (most likely through ECS or Standard instruction). As soon the EMI (Rs. 33,000) moves in to your OD account: your DP = Rs. 34,00,000, AB = Rs. 2,33,000 and BB = Rs. 31,67,000. (Since you have not mentioned about that Rs. 33,000 being deposited, please check if your EMI ECS or standard instruction is in place). I am assuming your EMI ECS or SI is not in place, then on this date DP = Rs. 34,00,000, AB = Rs. 2,00,000 and BB = Rs. 32,00,000.

    3. At the end of EMI day (assuming 10th), the principal portion (this is Rs. 9,000 for this month) of your EMI will get deducted from the available balance. Also your DP will be reduced. Now, DP = 33,91,000, AB = 1,91,000 and BB = Rs. 32,00,000 (same amount as before).

    4. At the end of the month comes the Debit Interest entry, going by your figures, you will be paying interest cost of Rs. 26,898 for the month. So, at the close of the month you will see the following figures: DP = Rs. 33,91,000, AB = 1,64,102, and BB = 32,26,898.

    I hope this provides you conceptual clarity of how accounting happens in Maxgain. Just check if your EMI is getting deposited in to the OD account on the date specified by you.

    Now coming to your other questions:

    “Could you tell me why my available balance is being deducted to reduce the drawing power? Is there any terms/rules to deduct money from my parked amount.”

    The only deduction that should happen from the available balance in your account apart from the monthly interest is the principal portion of your EMI. Since your drawing power has also reduced by the same amount, it is the principal amount being deducted from your loan balance. You have to pay back the principal amount also to SBI, right?

    Now read carefully: Going by the figures you have given, for the FIRST portion of the month, the daily interest will be calculated on Rs. 34,00,000 – Rs. 2,00,000 = Rs. 32,00,000. For the REMAINING portion of the month (after principal deduction), the interest will be be calculated on Rs. 33,91,000 – Rs. 1,91,000 = Rs. 32,00,000 (same amount as before). Got it?

    “Most importantly, if you park any amount and something being deducted from there, you won’t have any statement for that. It’s a manual tracking you have to maintain. This is 2nd time happened for me. ”

    You can ask your branch manager to give you the Amortization Schedule of your loan. This schedule will give the exact principal deduction that you will get month by month. Also, you can download the Provisional Certificate from the SBI website, which will give the provisional amounts of principal and interest on your loan paid/payable by you in a financial year.

    Regards
    Anuj

  70. Sourav says:

    Hello Friends,

    I need some clarification about the available balance and drawing power in SBI MG.

    Explaining step by step

    1. As I read in the earlier post, if I have taken 34 Lacs rupees Loan, the monthly EMI is 33000 and Interest is 28617 (considering it is first month EMI & my full loan disbursed, everything started)

    2. Let’s say on the 2nd month, I parked 2 Lacs in that OD Account. So the available balance is 2 Lacs and from the following month the interest will be calculated on (34,00,000 – 2,00,000) = 32,00,000 rupees means the interest will be 26898 (approx)

    So the delta interest amount (28617 – 26898) = 1719 will be added in the available balance. Means the available balance will be ( 2,00,000 + 1719 ) = 2,01,719.
    This calculation will keep on continuing unless I withdraw the available balance.

    PLEASE RE-CONFIRM IF THE ABOVE CALCULATION IS CORRECT.

    If the above calculation is correct, then I am seeing completely very messy stuffs going on in my SBI MG. I will explain in the next points with hypothetical calculations

    3. When I parked 2 Lacs in the OD Account, in the middle of the month my “available balance” automatically reduced to 191000. At the same time the drawing power also reduced to 9000 rupees means (34,00,000 – 9,000) = 33,91,000 rupees. I never found any amount is added as mentioned in Point 2.

    Could you tell me why my available balance is being deducted to reduce the drawing power? Is there any terms/rules to deduct money from my parked amount.

    Most importantly, if you park any amount and something being deducted from there, you won’t have any statement for that. It’s a manual tracking you have to maintain. This is 2nd time happened for me.

    You information / feedback will be very helpful to me.

    Rgds,
    Sourav

    1. Hi Sourav

      please ask open ended questions .

  71. Anuj says:

    Priyank

    You calculation is correct. The available balance in your OD account is yours to utilize. If you are getting disbursements as per construction plan, then you might have to wait for the demand letter from the builder. If there are no such requirements, then you can utilize the available balance.

    However, note that you will have to keep a minimum available balance in the OD account on two days and for two reasons:

    a) To pay for the principal component of EMI, this will get deducted from your available balance on the date of EMI, i.e. 5th in your case (If currently the principal component is Nil, then nothing will get deducted).

    b) To pay for the interest charge on the last day of the month.

    So effectively you have the flexibility to keep zero Available Balance in your account except for these two days mentioned above.

    Anuj

  72. Anuj says:

    Priyank

    The Debit Interest is the cost of loan for a month. You have paid this Interest for the amount withdrawn from your OD account, i.e., on charges and Principal. This amount will not be credited back to your account.

    The payment that you will make on 5th will get credited to your OD account. If this Pre-EMI and doesn’t consist of Principal component, then your Available Balance will increase by entire Rs. 16,000 and Book Balance will reduce by the same amount.

    On 31st March, you will again see a Debit Interest entry, which you can calculate similar to the way you have calculated for Feb.

    Since you have a maxgain account, and since your Rs. 16,000 will be reducing the Book Balance for 31-5=26 days, you actual Debit Interest will be lower than Rs. 16,000 (unless you take another disbursement this month). The balance amount will remain in your OD account and be a part of available balance.

    Anuj

    1. Priyank says:

      Hi Anuj,

      Thanks once again.

      What I understand is as follows:
      Current Available Balance: 26,82,723.00
      Current Book Balance: -18,13,277
      —————————————-
      PRE-EMI on 5th March: 16000
      —————————————-
      New Available Balance: 26,98,723.00
      Current Book Balance: -17,97,277

      Now as per new Available Balance (26,98,723.00), my Drawing Power in OD account is (26,98,723.00 + 18,07,773 i.e. disbursed Amt) = 45,06,496, which is 10496 more the my Loan sanctioned Amt (44,96,000).

      In this case, can I utilize the New Available Balance (26,98,723.00) entirely for my Loan.

      -Priyank

  73. Anuj says:

    Priyank

    Just an addendum, you will not be able to withdraw money from your OD account till you get the final disbursement.

    Anuj

    1. Priyank says:

      Hi Anuj,

      Thanks for the details.
      Just to understand more. In my case there is debit as follows:

      1. Rs. 562 on 10th Feb (CERSAI charges)
      2. Rs. 320 on 13th Feb (FRANKING Charges)
      3. Rs. 18,06,891 on 18th Feb (1st Disbursement)

      Total Debit as on 28th Feb -> 562+320+18,06,891 = 18,07,773

      Interest on above debit amount based on the formula -> Debit Amount*ROI*No.of Days/(365*100) = 5,504 (No Of days will be different for all the 3 debited amount)

      Loan Amount (Drawing Power): 44,96,000
      Available Balance: 26,82,723.00
      Book Balance: -18,13,277
      Interest for the month (debit on 28th Feb): 5,504
      Loan PRE-EMI Credit on 5th Mar: 16,000

      Please help me to understand the Available and Book Balance after I have paid the PRE-EMI of Rs. 16,000. Will the Available Balance revert back to -18,07,773.00 (i.e -18,13,277 + 5,504)

      Thanks In Advance.

      -Priyank

  74. Anuj says:

    Priyank

    In SBI Maxgain, you will see the DEBIT INTEREST entry on the last day of every month. This is regardless of the date of EMI, which is 5th in your case. If you wish, you can withdraw the available balance in your OD account after it credited on 5th. Just make sure that you have it back in account on the last day of the month for honoring the DEBIT INTEREST transaction.

    FYI, DEBIT INTEREST is the total of daily interest calculated on the closing balance (Drawing Power Less Available Balance) in your account.

    Anuj

  75. Priyank says:

    Hello,

    I have a query. There is certain amount debited from my Loan Account on 28th Feb as DEBIT INTEREST.

    The loan has just started and i have just done the 1st disbursement on 18th Feb and my pre-emi is scheduled on 5th of every month. I have not opted for EMI from the first month.

    Can you please let me know what is the Debit Interest that is charged to me.

    Thanks in Advance.

    1. Hi Priyank

      I am not very sure on this Debit Interest part !

  76. Anuj says:

    Dhaval Patel

    If your current interest rate is 10.50%, initial loan amount Rs. 39L and initial tenure 15 years, then your EMI should be around 37-38K. How is it that you are “repaying” 85K every month?

    I assume that you might have increased your EMI to Rs. 85,ooo. Taking that into consideration and with loan balance of 25L and ROI of 10.50%; your loan balance tenure should be around 35 months.

    Now, if you pay 21K and reduce the ROI to 10.15% as you have said, your revised loan tenure will be approx. 34 months.

    So, if the information that you have provided is correct, then you will be reducing only about 1 month on your loan tenure by converting the interest rate. Not of much benefit I would say.

    Anuj

  77. V AMAR CHAND says:

    Dear Sir,

    Thanks for all the information you have given regarding Max Gain, it is a great option not only for the people who generate surplus income but also for people managing installments as whatever amount you park in the account will be counted and interest will be adjusted accordingly, also the excess amount may be withdrawn as per your convenience after the final disbursement is done. ThanQ

    1. Hi V AMAR CHAND

      Thanks for your sharing your valuable comment on this topic. Please keep sharing your views in future also

      Manish

  78. Anuj says:

    Dhaval Patel

    “I have a SBI MaxGain Loan of 39L @ 10.5% for 15 years. Bank has asked me to near about 21000 to revise interest rate @ 10.15%.”

    If you are already having 10.15% interest rate than where is the question of revising it to 10.15%?

    1. Dhaval Patel says:

      Please read it as “current rate of interest is 10.50%”

  79. Dhaval Patel says:

    Hi,

    I have a SBI MaxGain Loan of 39L @ 10.5% for 15 years. Bank has asked me to near about 21000 to revise interest rate @ 10.15% . I am repaying near about 85000 every month and 2500000 loan is remaining as of today.
    I would like to know that if repaying the loan at the same amount, is it beneficiary to change the interest rate by paying around 21K?

    Thanks,
    Dhaval

    1. I think you should pay 21k and reset it to 10.15% . thats a good idea !

      Manish

  80. Avinash says:

    Can we withdraw the accumulated saved interest amount ?

    1. Avinash says:

      Got the answer from other comments and it is yes.

  81. Anuj says:

    laxy

    Any surplus amount kept in Maxgain account is your liquid Available Balance and not a loan prepayment.

    If you increase your EMi by Rs. 5,000, your revised tenure will be calculated on the Drawing Power (in your case 29-2 = 27 lakhs).

    should i do prepayment of this extra 1 lac by giving a letter? any condition on prepayment?
    Its is totally your wish.

    Regards
    Anuj

    1. LAXY says:

      Thanks Anuj for reply.

      these prepayment and restructure will be done at branch or RACPC?

      1. V J Vasundhara says:

        RACPC

  82. Anuj says:

    Ritesh

    OPTION-1. Shall I request the bank to restructure my loan and make Drawing Power = 35,40,500 and Available balance as zero so that my monthly EMI reduces.

    This is slightly difficult as SBI has already structured your EMI according to the sanctioned amount. If you don’t want to use this money, you can make a principal prepayment to SBI with this available balance amount (plus any amount that you wish to add) and then get your EMI/tenure reduced.

    OPTION-2. Shall I keep my per month loan as it is i.e. 36,250 (based on the 39 lacs loan) and keep Available balance as 3,59,500 to avail the interest benefit.

    You can certainly do this, this is a liquid balance available with you and it is your wish to keep it in the Maxgain account or to withdraw it.

    Regards
    Anuj

  83. Anuj says:

    Pavan S

    No bank/HFC allows the customer to make pre-payments before the loan is fully disbursed.

    If you want to reduce your interest cost on the loan, then instead of paying only pre-EMI, you can start paying full EMI during the pre-completion phase. This would be similar to making prepayments before full disbursement. However, please note that you wont be able to claim income tax deduction on this principal component u/s 80C which is available only for self-occupied house property.

    For knowing the benefits of SBI Maxgain, please read the posts in this forum.

    Anuj

  84. laxy says:

    Dear Ashal,

    i am having this max. gain a/c . when i took interest certificate this yr i came to know the extra amount we transfer to OD a/c won’t be considered as principal part so got less principal amt than expected considering extra amount. this time bank person told if u want to increase principal part u have to increase emi by giving ECS.
    Now my question is my actual principal repayment is 2 lac, and 1 lac extra i kept in OD a/c. total 3 lacs. of total loan of 29lac. if now i would like to increase emi by 5k whether tenure wl be calculated 29-3= 26lacs or for 29-2=27 lacs. should i do prepayment of this extra 1 lac by giving a letter? any condition on prepayment?

  85. Ritesh says:

    Dear Ashal,

    I got 39,00,000/- sanctioned as my loan amount under Max Gain out of which I got only 35,40,500/- disbursed and managed the rest on my own. Now my Available balance shows as 3,59,500/- and my full EMI starts from next month (i.e. 36,250 per month based on 39 lacs loan). Now what will be a better option for me out of the below two — in a nut shell, I want to reduce my monthly EMI:
    OPTION-1. Shall I request the bank to restructure my loan and make Drawing Power = 35,40,500 and Available balance as zero so that my monthly EMI reduces
    OR
    OPTION-2. Shall I keep my per month loan as it is i.e. 36,250 (based on the 39 lacs loan) and keep Available balance as 3,59,500 to avail the interest benefit.

    Note: As the available balance is not something that I have put in the OD A/c but is the difference of Loan sanctioned – Loan disbursed, will that still be considered as something that I deposited? Can I even use it as a liquid money as you mentioned in the article?

    Need your valuable guidance on this as I am very new to this Loan & EMI world !!

    Thanks in advance,
    Ritesh

    1. V J Vasundhara says:

      Dear Ashal,

      I also have some amount of knowledge regarding Max Gain, I will try to answer as per your options.

      1. EMI restructuring is only done only when you have deposited a considerable amount towards your principle i.e. around 20-25% of the outstanding balance.

      2. The available balance will be adjusted towards your interest part unless you are paying pre EMI till your EMI starts so be sure you are paying the interest part of your disbursed loan amount.

      3. The balance can only be utilised by you only after the final disbursement is made by the bank and you are provided with transaction rights for the account.

  86. Pavan S says:

    Hi Manish

    Sorry I did not get your point. I m planning to take loan from friends and relatives to pay off the amount so I can have less burden on tax interest.

    1. How will you have less tax burden if you take loan from friends/relatives ?

  87. Pavan S says:

    Hi

    I m planning to buy an under construction flat possession by next year march 2016. The total cost would be around 65 lakhs of which I ll pay 13 lakhs as initial payment. Remaining I would be taking a home loan. I would like to know what is the best thing that I should do incase of payments. Since the flat is under construction, the bank would release 20% of my 52 lakhs by next month and another 20 % by August. I have plans to make prepayments in between of around 6 lakhs by May and another 15 by end of December. Please can you tell me what would be the EMI that I would pay initially and simultaneously after May, August and December. I m not sure of the calculations and hence need advice before I proceed. Also would be great if you can tell me if I should go for a Max gain home loan or a normal home loan from SBI and what are the benefits if I take a Max gain home loan.

    1. I think that can be given only by bank .

  88. sree4u says:

    Hi Ashal/Manish,

    I need small help in understadning outstanding amount.
    My Home loan was sanctioned in 2012 for under construction property, amount sanctioned is 20lakhs.
    My EMIs started from 01/01/2015 only, but in my OD account Drawing power(outstadnoing amount) is showing
    as 18 lakhs only even though 20 lkahs is released for builder in 3 instalments (12+5+3).

    See my account details

    Account Number XXX Branch XXX
    Account Type SBI H L MAXGAIN AUG12
    Account Name XXX
    Interest Rate(% p.a.) 10.25
    Drawing Power 18,09,796.00 Balance as on 01 Jan 2015 -18,26,186.00

    Thanks,
    Sree

    1. ashalanshu says:

      Dear Sree, please mail me your account statement in exl. format.

      Thanks

      Ashal

  89. Girish says:

    Dear sir,
    we have purchasing house, still i have sufficient amount But i have planning after 2 years starting self business so i need money after 2 years. pls suggest Which home loan is better

    1. You can look at HDFC or SBI home loans !

  90. Prabhu says:

    Yes, rightly said manish. Is it worth to spend extra on tax for want of liquidity. instead we can balance tax outgo & Liquidity by spending some money on both like 2k for extra emi and 2k in bank savings accounts. What is your view ?

    1. Yes, even i agree that we can pay more tax if our liquidity requirement is met 🙂

  91. Prabhu says:

    Hi Manish,
    i’ve a query here. let us compare between normal and maxgain loan with the given scenario,
    Loan details – 20L , 10.5 % & 25 years. 3k extra i pay every month for a year.

    CASE 1 – 3k additional payment toward maxgain account,
    Total Principal Total Interest
    Normal loan ₹17,426.43 ₹209,177.18
    Max gain ₹17,426.43 ₹207,393.14
    Interest saved = 1,784.04 & Avl money in account is Rs 37784. Liquidity avl

    CASE 1 – 3k additional payment toward maxgain account,
    Total Principal Total Interest
    Normal loan ₹17,426.43 ₹209,177.18
    Max gain ₹17,426.43 ₹207,393.14
    Interest saved = 1,784.04 & Avl money in account is Rs 37784. Liquidity avl

    CASE 2 – 3k additional payment as extra EMI
    Total Principal Total Interest
    Normal loan 55210.46 207393.14

    Interest saved = 1,784.04. Total repayment done 37784. No Liquidity.
    And, for the 36000 principal payment, In 20% slab, i would save Tax of Rs.7200 (600/month)

    Now, is it anyway useful to lose 600/month in the name of tax for want of liquidity of cash ? if i need liquidity, i can opt to keep some money reserve and can pay the remaining towards additional EMI to save Tax.

    What is your views friends ?

    1. Good point .. I think there cant be one answer to that, as some people might want the liquidity factor and some might not want it so badly !

  92. Anuj Saxena says:

    Hi All,
    May be this is repeated question but I will br grateful if someone answers this
    Say I have a loan of 30 lacs and an emi of 30k. Now I park a surplus of 30 lacs in loan account( I have this but dont want to lose liquidity so park it here). So the outgoing interest will be zero. Now at 15th of month I will deposit my emi. Immediately the principal amount will decrease the DP by some x amount and my available balance will increase by 30000-x(Emi – principal).
    Q when I have already paid the whole loan amount where is this principal getting accumulated.
    Q Now say I keep this happening for 1 year, and then go to bank for pre closure. What will happen to the principal amount I deposited ( say x *12). Since I did not have any outstanding loan for a year I should be able to get this principal paid somehow.

    Please someone elaborate. Thanks in advance.

    1. ashalanshu says:

      The money parked by you has nothing to do with your regular EMIs. The drawing power reduction or should I say actual loan repayment happens from EMI’s principal component. The extra money parked by you just keep your interest outgo lower or zero, as the case may be.

      For your given situation – 30LDP, 30L AB, aftert 12 months there ‘ll be excess amount as AB from interest part of 12 EMIs along with the regular 30L Rs.

      Thanks

      Ashal

  93. Vikas Kumar says:

    Hi ,
    I have SBI max home loan & 70 Lac got sanctioned for under construction property & out of that 16 Lac got disbursed ,i have not opted for ECS ,in place of ECS can i transfer it monthly manually from my saving account to home loan account ?

    I wants to transfer 69 lac manually ( which is same ammount as full EMI) every month to my loan account ,am i going to get any loss this way as compare to monthly ECS .

    Thanks,
    Vikas

    1. Vikas Kumar says:

      Typo this is 69 thousands ,not 69 lac

    2. ashalanshu says:

      Dear Vikas, yes you can do it manually.

      Thanks

      Ashal

  94. naveen says:

    Please Help,
    I have taken max gain Home Loan. My SBI branch is telling me that I can Park funds in my loan A/c but can’t use the withdrawing facility till I get the possession of home. Is the bank right. I will get possession in 2016. So I am unable to use full benefit of max gain till then.
    Kindly some one help.

    1. Yes, as far as I know Maxgain facility is applicable once a person gets possession !

  95. Anuj says:

    Sreekanth

    The key difference between SBI Maxgain Home Loan and HSBC Smart Home Loan is the way the interest saving is treated by these banks.

    Similarities:
    * In both the loans, the interest is calculated on a daily basis.

    * In both, this daily interest is calculated on the Principal outstanding minus available balance in the home loan current account.

    * For a particular month, if one has similar amounts as principal outstanding, same amounts as available balance and if the interest rate for that month is also same, the interest cost on the loan for that month will also be same.

    Now, what is the difference:

    Principal Component:
    * In case of SBI Maxgain, Principal components in EMIs are pre-decided based on the initial amortization. For eg. if, in a particular month, the principal component in EMI was supposed to be Rs. xxx as per the original amortization schedule; that is exactly what the principal component would be for that month, regardless of whether one has zero available balance or a very high balance in the current account.
    * In case of HSBC Maxgain, Principal component in EMI is not pre-decided. The interest cost saving goes towards adding the principal component in EMI.

    Interest Component:
    * In case of SBI, the interest cost savings (by maintaining a positive available balance) remain in the OD account and are added to the available (withdrawable) balance.
    * In case of HSBC Smart Home, the interest cost savings are directed towards principal payments. These savings thus cannot be withdrawn.

    Loan Tenure:
    * In case of SBI Maxgain, the loan tenure does not change by itself. If a customer wants to make reduce loan tenure, she has to specifically approach SBI and make a pre-payment towards principal outstanding.
    * In case of HSBC Smart Home, the loan tenure reduces automatically through transfer of interest savings into principal components. This is like making a small pre-payment every month. Of course, a customer can make direct pre-payments as well just like is SBI MG.

    Liquidity:
    * In case of SBI MG: the amount deposited by customer in the OD account remains there and is 100% liquid (this is also in case of HSBC SH). However, this liquid amount, i.e., the available balance keeps on increasing (if a positive available balance is maintained) and leads to increased amount available for withdrawal.
    * In case of HSBC SH: The liquid balance remains unchanged if no additional deposits/withdrawals are made.

    Cash Flow:
    * From cash flow stand point, a customer having positive available balance in SBI MG will find that the net monthly cash outgo towards servicing the loan is less than the EMI. “EMI actually becomes a formality here.”
    * In case of HSBC SH, the net monthly cash outflow towards the loan is exactly equal to EMI, just like any other vanilla home loan product. This is regardless of whether a customer has zero available balance or a very high balance in the current account.

    In Summary:
    * In both the loans, the maximum benefit is derived by keeping a healthy balance in the OD account (upwards of 25% of loan outstanding will be advisable).
    * SBI MG would be advisable if one is not in a rush to close the loan early and is planning to build a good liquid balance over time for other investments.
    * HSBC SH would be advisable if one is planning to close the loan early and is contend with no increases in the liquid balance over time (apart from one’s own deposits).

    Regards
    Anuj

  96. Sreekanth says:

    Is there a comparison chart between the facilities/charges and advantages/disadvantages between SBI/SC/HSBC’s services for this smart-home(or max gain)? Even though HSBC and SC charge their customers more for the smart home feature, the interest rate is coming to be same (actually better). 10.15 for SBI and 10.10 for HSBC/SC. But i am a little skeptic on taking a loan from HSBC/SC as i couldn’t find a proper review on these products – pros and cons w.r.t SBI MaxGain. It would help me a LOT if you guys can provide me this comparison metric. Thanks a lot.

    1. Hi Sreekanth

      At this moment we dont have it .

  97. Anuj says:

    Hi Ashal, How you doing?

    I have a question regarding calculation of Principal component in the EMI.

    I have developed a calculator which is helping me find out the exact amount that I will be charged as interest, regardless of the number of withdrawals and deposits that I make into the OD account throughout the month. The calculator is working flawlessly (patting my back).

    However, I am not able to figure out how the principal reductions from DP/or the principal components in EMI are calculated every month. Can you please let me figure out what is the logic for calculating this?

    Cheers
    Anuj

  98. Mayank says:

    I have a Max gain account but still the overdraft facility hasn’t started (home possession still pending). I have started repaying EMIs, however the EMI amount is more then loan amount disbursed.

    E.g.
    Loan amount sanctioned: 70 Lakhs
    Loan amount disbursed: 50 Lakhs
    EMI (original): 70,000

    Applicable EMI on 50 lakhs should be 50,000. So in a way I am paying 20k extra with each EMI.

    How does this get reflectedin my account statements?

  99. Vinay G says:

    Using SBI MAXGAIN calculator from emicalculator.net website.

    I put 2L on the start date of loan itself after 180 months…it is reflecting as the above mentioned interest.

    http://emicalculator.net/wp-content/uploads/SBI-MaxGain.xlsx?2197af

    1. Vinay G says:

      So you accept that Fixed Deposits are not at all better than repaying Home Loan using Maxgain ?

  100. Anuj says:

    Dear Ashal

    Thanks for the replay.

    I also shared the same logic that you have explained above (Principal component of EMI getting debited from OD account on the EMI date and DP getting reduced to that extent on the same date).

    However, I am not seeing the transactions happening in my account in that fashion. I have checked multiple times with my Branch manager and also at the RACPC. But even those guys came out with all incorrect explanations (my previous posts share those details).

    Can you please give me your email id where I can share my OD account statement with you.

    Cheers!
    Anuj

    1. ashalanshu says:

      Dear Anuj, to get my personal mail id, please ask dear Manish.

      manish@jagoinvestor.com

      Alternatively, you may search for my FB profile by my name Ashal Jauhari.

      Thanks

      Ashal

  101. Vinay G says:

    Parking my extra money in Maxgain OD account is more beneficial than putting my money in Fixed Deposits or not ?

    1. ashalanshu says:

      Dear Vinay,parking money in FD is more beneficial.

      Thanks

      Ashal

      1. Vinay G says:

        Please explain how parking money in Fixed Deposits is more beneficial than putting it in Maxgain OD account as surplus ?

        1. Rate of Interest in FD is from 5 % for 30 days to 8.7 % for 4 years period.

        2. Difference between Compounding monthly & Compounding quarterly is meagre. The difference cannot catch 8.7 % of FD to 10.15% of Maxgain.

        3. Even small amount (say 500) can be put up in surplus Maxgain OD when wished.

        vinay.raigad at gmail

        Thanks

        1. ashalanshu says:

          Dear Vinay, please check and calculate say same 500 Rs. are invested for remaining 15-18-20Y term of your loan. What ‘ll be the interest saving over the period from max gain and what ‘ll be the earning from FD for your given ROI?

          Thanks

          Ashal

          1. Vinay G says:

            Is it the case ??? :

            Till Principal 0f EMI = Interest of EMI (approx) investing in MaxgainOD is more beneficial than Fixed Deposits.

            Reason : Interest amount goes DOWN with each EMI.

            Also in initial years FD pays less interest.

            To gain MAXIMUM in maxgain invest as much as EARLY as possible but till your HALF-LIFE of repayment period is over. or say principal == interest.

            1. Vinay G says:

              When Available Balance = Book Balance close the loan.

              FD is computed at LESS Rate of Interest. Indeed Very less in initial few years.

              The method employed in FD i.e. computing Quarterly is giving slightly less as output as compared to Maxgain’s computing Monthly even at same rate of Interest.

              No deposit less than 5000 , for less than 29 days in FD. Have to go to Bank personally to do FD.

              Still FD is beneficial HOW ?

            2. ashalanshu says:

              Dear Vinay, if money is parked only for few days, of course Max Gain ‘ll save you more but in case of long term parking – just park and forget, the FD ‘ll score over Max Gain due to positive compounding in the long term.

              Thanks

              Ashal

            3. Vinay G says:

              Hey,

              I put up in SBI FD Calculator :

              1. Rs 2,00,000.00 (Two Lakhs)
              2. Rate Interest : 8.7%
              3. Period 240 months
              4. Compounded Quartely

              Interest : Interest earned Rs.918411.71

              Then used SBI Maxgain Calculator:

              1. Put Rs 2,00,000.00 (Two Lakhs) on the day itself I got loan.
              2. Rate of Interest : 10.15%
              3. Period of loan :240 months
              4. Compounded Monthly ( it seems)

              Interest Earned: 918,587.63 in 180 months as loan got over in that period of 180 months only .

              Interest still higher in Maxgain even in lesser period of 180 months . Even when I deposited sufficiently large amount that to be on the start date of loan itself ( as the sooner the money you put the better it will be to reduce interest )

              Is there any hidden concept you could share which proves Fixed Deposit is more beneficial than Maxgain OD account of SBI ?

              Thanks

            4. ashalanshu says:

              How did you get the figure of 918587.63 in home loan?

              Thanks

              Ashal

  102. Anuj says:

    Dear Ashal

    I have an observation to share based on they way I see the accounting of Interest and Principal components in my Maxgain account. Please let me know if my logic is correct.

    Let’s say a customer has month opening DP of Rs. 10,00,000 with zero available balance (AB). The EMI amount is Rs. 10,000. Out of this Rs. 10,000, in that particular month, Rs. 2,000 is scheduled to go towards principal component and Rs. 8,000 as interest component.

    On the date of EMI, say on 5th of the month, Rs. 10,000 moves from customer’s savings account his OD account. Now the AB is Rs. 10,000.

    On 31st of the month, interest is debited from his OD account. Since the customer had Rs. 10,000 as AB for part of the month. The interest component will be calculated for 5 days on DP = Rs. 10,00,000 less AB = Rs. 0; and for 25 days on DP = 10,00,000 less AB = Rs. 10,000. Let’s say the interest thus calculated for the month is Rs. 7,900.

    Thus, on 31st of the month:
    His DP is Rs. 1,00,000 less Rs. 2,000 (principal component) = Rs. 98,000
    His AB is Rs. 10,000 less Rs. 7,900 (interest component) = Rs. 2,100

    Which means that although Rs. 10,000 was transferred from his savings account to OD account, effectively, the customer has paid only Rs. 7,900 during the month despite not consciously maintaining any cash balance in his OD account. The remaining Rs. 2,100 remains in his OD account as AB.

    Please let me know if the above logic is correct. This is the way I am seeing transactions happening in my account.

    Cheers
    Anuj

    1. ashalanshu says:

      Dear Anuj,on 5th,the EMI credit day, 2000 Rs. out of 10K ‘ll be adjusted towards Principal and hence new DP from 5th ‘ll be 998000 Rs. The interest part of EMI, 8000 Rs. ‘ll become part of AB and finally actual interest ‘ll be debited on last day of the month.

      Thanks

      Ashal

  103. Brajesh says:

    I want to know how beneficial is it to keep paying the interest accrued during the time before final disbursement. So if the total sanctioned amount is 50L and till date the disbursed amount is 30L. The EMI is not yet started and all I see is my available banalce going down due to the interest on 30L.

    My questions are :
    1. What are the benefits of paying the accrued interest during this period (before EMI starts).
    2. I have heard that in some cases interest rate goes down if accrued interest is repaid during moratorium period. Is it true for MaxGain as well?

    Thanks for your help.

    1. ashalanshu says:

      Dear Brajesh, please opt for full EMI now to save on final interest outgo on your loan.

      Thanks

      Ashal

      1. brsinh says:

        Dear Ashal, thanks for the reply. But I have already completed the process and quite a few disbursements have already been made. The accrued interest I was talking about was for those disbursements.
        Q1. Is there an option to change it now? Can I start paying full EMI from this point of time ?
        Q2. Should I even do it? If I have excess money to pay full EMI right from the beginning, Wouldn’t it be better to pay part of Builder’s demand from my own pocket rather than getting it as loan from the bank and paying interest for it? Please advice.

        Thanks,
        Brajesh

        1. ashalanshu says:

          Dear Brsinh, You can ask in written to SBI to start full EMI. In case your request is turned down, no issue. Just keep parking the difference in EMI amount into Max Gain account directly. The benefit in interest outgo ‘ll be there.

          Thanks

          Ashal

  104. Anuj says:

    Ravi Kishore

    BUT DP and BB still same.
    Your DP will reduce on the date the monthly principal is deducted from your OD account.
    The BB in your account has been affected, please see once again. it has been reduced by Rs. 1,000 since you have deposited that amount.

    Are there some other permissions required from Loan processing centres, or any other formality to fully use the Max Gain account ?
    You would need to take transaction rights from your bank branch manager for being able to move money OUT of the OD account. Till then, you will be be able to only move money IN to the OD A/c.

    Anuj

    1. Ravi Kishore says:

      Thanks Anuj for your reply, appreciate your help.

      On a side note: I am giving this link to all my acquaintances who are applying for SBI Max Gain 🙂

      1. ashalanshu says:

        Dear Ravi, thanks for this link sharing.

        Thanks

        Ashal

  105. Anuj says:

    Ronette

    @ Anuj what you are suggesting is I utilise the benefits of the OD account and the surplus i transfer to an FD right?

    I am suggesting that you will not get any return on surplus balance in OD account. Hence, you may consider another place to park the surplus balance depending on your return/liquidity requirements.

    Anuj

  106. Ravi Kishore says:

    Thanks to the experts for sharing this info in great article. I recently got my home loan sanctioned (thanks to this article, I selected Max Gain).

    I can see my OD loan account along with my another Savings SBI account. From this article and Ashal’s youtube videos I remember that there is certain relation between Available Balance (AB), Drawing Power(DP) and Book Balance(BB) (i.e. BB = DP – AB). To start with I deposited Rs 1000/- in to my Max Gain OD account. And immediately I can see that my AB has changed from ZERO to Rs 1000/- BUT DP and BB still same.

    Are there some other permissions required from Loan processing centres, or any other formality to fully use the Max Gain account ?

    SnapShot:

    Account Number XXXXXXX
    Description SBI YUVA HL MAXGAIN (AUG14)
    Name Mr. XXXXX
    Book Balance -26,99,000.00
    Available Balance 1,000.00
    Limit 27,00,000.00
    Uncleared balance 0.00
    Drawing Power 27,00,000.00
    Currency INR
    Rate of Interest (% p.a.) 10.15%
    Lien Amount 0.00

    Thanks to all for giving this wonderful platform to share.

    1. ashalanshu says:

      Dear Ravi, the 27L DP and 26.99L BB indicates that you are getting the benefit of 1K Rs. parked by you.

      Please apply for transaction rights to be able to withdraw your own money in case of need.

      Thanks

      Ashal

      1. Parin says:

        I deposited Rs. xxxx into my maxgain acocunt as surplus. However the same is not showing in available balance. instaed the book balance has been reduced by same amount. can anyone help me understand the logic behind that ?

        I ahve already raised this issue with SBI. however they are yet to reply back.

        Thanks in advance for your help

  107. Ronette says:

    Thank you Manish Ashal and Anuj

    @ Anuj what you are suggesting is I utilise the benefits of the OD account and the surplus i transfer to an FD right?

  108. Anuj says:

    Hi Ronette

    1) What will be the savings on interest? will it be better than an fd?

    If, during a month, your OD account balance is equal to the Drawing Power (on a daily basis), you will be effectively getting zero interest debit from your OD account.

    However, you will be still paying the full EMI from your savings account to the OD account. Just that the interest portion deducted in that month will be zero. Which means that what you will be effectively paying from your pocket will be only the principal portion of the EMI.

    In this case, at the end of the month, your available balance will exceed the drawing power. It will be advisable for you to take out this surplus balance and invest it elsewhere as you will not be getting any benefit on retaining any amount above Drawing Power in your OD account.

    Comparison with FD:
    A bank FD today gives a pre-tax return of anywhere between 7.5% to 9.5%.
    The interest that you save on a Maxgain account is 10.10% – 10.15%. For a person in 30% tax bracket, this is equal to earning a pre-tax return of approx 14.7%.

    Regards
    Anuj

  109. Shyam Kapil says:

    original article by Ashal is very good. He has helped SBI in their business. I tried to get clarification from SBI but could not get it not even from their website.
    Pl acccept my sincere thanks for such wonderful article.

    1. ashalanshu says:

      Dear Shyam, thanks for your words of appreciation.

      Thanks

      Ashal

  110. Ronette says:

    I have a question Say i take a loan of 12 lakhs for a period of 15 years with 10.10 % and keep a surplus of 12 lacs in the Max gain Account..
    1) What will be the savings on interest? will it be better than an fd?
    I know that I will not get the additional taxation benefits of 24b since that amount can be withdrawn anytime.

    1. If you keep full 12 lacs in account, then there wont be any EMI itself I guess!

    2. ashalanshu says:

      Dear Ronette, parking money in Fd ‘ll be more beneficial than parking it in Max Gain. Do not go by my words alone and calculate on your own. This is due to positive compounding in FD and negative compounding in home loan.

      Thanks

      Ashal

  111. Anuj says:

    Of course you are Ashal. Its for lesser mortals like me 🙂

  112. Anuj says:

    Just a small tip for the Maxgain Home loan customers. I am sure Ashal and Manish would have covered it earlier too.

    You all know that it is best to keep all your liquid money in Maxgain OD account to save on interest cost which can be significant.

    It is advisable to create a standing instruction to move the EMI amount from the OD account to the savings account from which you pay your monthly EMI.

    Suppose your EMI becomes due on 5th of every month. You can create a standing instruction to move an amount equal to the EMI amount from Maxgain OD account to the EMI paying account on 2nd of every month. This way, you will get twofold benefit:
    1. You will be making full use of the Maxgain benefit.
    2. You don’t have to bother about forgetting to move the amount by yourself before the EMI date.

    If effect, once you create the standing instruction, the whole process will work by itself giving you the full benefit of Maxgain. The EMI amount will itself get credited from the OD account to your savings account and then back to the OD account on the EMI date.

    Cheers!
    Anuj

    1. ashalanshu says:

      Dear Anuj, I’m using it already. 🙂

      Thanks

      Ashal

    2. jayaprakash says:

      I didn’t even have any standing instruction from any account for EMI. Just park your money in OD account and cancel your EMI mandate in the bank account where you have setup. Every month on last day of month, interest will be deducted from parked amount in OD and on 5th of every month principal amount of that specific month EMI will be deducted from your parked money. No hassle of EMI mandate, standing instruction or anything else to worry about EMI payments. I’ve been doing this since last 4 months.

    3. Thanks for sharing that Anuj !

  113. RajP says:

    Hi,

    I very recently started using my Maxgain account. Transferred 50K to the account and was expecting to see 50K as available balance. However to my surprise, system was showing available balance as 39812. When checked with the branch, they came up with a story that remaining amount has been adjusted with the interest and asked me to wait till EMI comes in (20th every month) to see my actual 50K balance. Even today after having the EMI credited to maxgain account, the available balance figure is not tallying.

    Book Balance -23,52,948.00
    Available Balance 40,978.00

    Date Narration Debit Credit
    8-Sep Transfer 50000
    20-Sep EMI 23624
    30-Sep Debit Interest 19673

    Could you please guide me on this?

    1. ashalanshu says:

      Dear Raj, can you share your actual account statement with me in exl. format on my personal mail id?

      Thanks

      Ashal

      1. Parin says:

        Even i am facing the same problem. Ashalanshu can you help me with the same as well ?

  114. Ajay P says:

    Hi,

    I transferred by existing loan with LICHFL to SBI under the max gain scheme with ROI of 10.15%. I have also availed cheque book from my branch for the same. The loan account is on my name where as my wife is co borrower to the loan. On cheque book it has both the names mine and my wife’s. My question is while issuing cheques from the max gain OD account is it necessary that the cheque is signed by both the people or only one signature would do? The reason i m asking this question is because there is ‘and’ in between both the names where we sign the OD cheque where as in my normal savings account cheque both names are separated by slash (/). So just wanted to clarify in this regard.

    1. ashalanshu says:

      Dear Ajay, both should sign for a valid check.

      Thanks

      Ashal

  115. leanprateek says:

    account Statement for the period 30/3/2014 to 30/9/2014
    Account Number 00000033628318971 Branch P.H ROAD BRANCH
    Address MD-1/269 SECTOR D-1
    LDA COLONY
    KANPUR ROAD
    Lucknow – 226012. Account Type SBI H L MAXGAIN OD (DEC13)
    Account Name Mr. PRATEEK KAPOOR
    Interest Rate(% p.a.) 10.15
    Drawing Power 22,50,000.00 Balance as on 30 Mar 2014 -9,61,643.00

    kINDLY HELP ME UNDERSTAND THIS

    1. ashalanshu says:

      Dear Leanprateek, please check my Youtube video on SBI Maxgain.

      Thanks

      Ashal

  116. Ravi Kishore says:

    Hi,

    Lets say Loan amount is L, and during first month I parked Rs X in my MG account. Assume savings on interest during first month is Rs Y, and Rs Y got deposited into my MG account. So at the beginning of second month parked amount in MG account is Rs (X + Y).

    Query:

    In the next month how the calculation will be i.e. what amount bank will take as the parked amount, Rs X or Rs (X + Y). i.e. Interest savings which get accumulated every month, do they get added and treated as parked amount for interest reduction calculations.

    1. ashalanshu says:

      Dear Ravi, there is no separate Y. From your EMI + X, there ‘ll be debit for home loan principal e.g. P and I for interest. So next month, the EMI+X – (P+I) ‘ll be your AB and it ‘ll help to save more interest next month. So eventually, there ‘ll be less Interest outgo each month than prev. month.

      Thanks

      Ashal

  117. shweta sawant says:

    Hi Ashal
    Thank you for jotting down all the facts of SBI maxgain.
    I have two questions on max gain
    1> I have a loan of 40 lacs and have 6 lakh rupees in surplus. so i asked the SBI to accept it as pre payment of the principal amount. and the loan officer has rejected the offer saying that
    a> one can pay minimum of 20% of the book balance (principal) for prepayment of principal.

    please confirm if this is true. 20 % of principal is actually a huge amount and i had some surplus which I want to use to reduce the principal amount.

    2> I also wanted SBI to reduce the rate of interest that is charged on the loan to reduce to 10.10% that is applicable to a women as per SBI rules. however the loan officer has rejected that as well.

    few years back the loan was adjusted to apply the base rate for the loan, i was even asked to pay a 25K something charges for it. Now the loan officer mentions that the rate can be changed only once in its lifetime. hence the new rate available for women 10.10% cannot be applied to my loan.

    please confirm if this is true.

    with regards
    Shweta

    1. I think 20% is a big number , That just cant be that much

    2. ashalanshu says:

      Dear Shweta, if you have parked your 6L Rs. in your SBI Max Gain account, you are already getting the benefit of lower interest outgo. Why do you want to prepay and lose out the liquidity of this amount?

      Yes in case of SBI, the rate reduction (basically spread reduction) can be done only once in the life of loan.

      Thanks

      Ashal

  118. hereiam09 says:

    comments posted here I see that various people are repaying their SBI Max Gain loan with different interest rates at a given point of time, for some it,s 9.95, for others it,s 10.7, and also many other rates. I understand that the bank can change the rates over a period of time, but is the interest rate different at different states?
    ALSO, isn’t it truethat SBI offers only floting rate of interest now both in ordinary/MaxGain loans?
    I was under the impression that the Max Gain loan rate = ordinary home loan interest rate at any given point of time, and the two also vary by the same amount over the same period .

    Also, if the interest rate (in a normal home loan) falls after a certain hike does MaxGain interest rate also falls or remains at the upper value? Or do we have to pay charges (@ 0.56% of the DP) to get it back to the lower value?

    I am concerned because in a loan of approx 30L, a small diference in ROI also creates a lot of differece in the long run.
    Please clarify,

    Thanks,

    1. I think it can change from time to time , but not state to state .

    2. ashalanshu says:

      Dear Hereiam09, the answer lies in the difference of spread offered to each person, as everybody took loan at different time with different spread over base rate.

      Thanks

      Ashal

  119. hereiam says:

    Dear Ashal and Manish,

    First, I would like to thank you for the time you devote for the benefit of us home loan seekers.
    I am going to purchase a flat of approximate cost [40,00,000/- + (Registration & Service tax = 5,00,000/-)] = 45,00,000/-. I am supposed to pay 20% of the property value = 20% of 40,00,000/- = 8,00,000/- at the time of agreement with the builder which is due next week. [From my web browsing I have found that banks do not finance the Registration fees. Please correct me if I am wrong!]
    The remaining 32,00,000/- I would like to borrow from SBI under the Max Gain scheme (Thanks to your article and the stream of conversations that followed, I think I have understood how it works ).
    So I went to my local SBI branch, where I currently hold two SB A/C (one with my mother as the first A/C- holder, other with my wife as the second A/C- holder) to ask for the details of the application process. What followed was quiet amusing –I would like to share it here:
    In the branch the person I was directed to for home loan related matters didn’t even know about the scheme.
    Then some other bank official informed me that
    1) Max Gain is only available for building houses, not for purchasing flats (this is outright rubbish …as I latter found out that in SBI web-site there is a ‘pdf’- file available under the link “Most Important Terms and Conditions” which clearly says at the very beginning that Max Gain is available for Flat purchase).
    2) Also that the interest rates are 2-3-4-% higher for Max Gain Scheme,
    3) And also that SBI does not approve Max Gain scheme just because someone asks for it (its being an overdraft A/C and all..).
    Sensing trouble, I went back the next day armed with all the related wab-pages of SBI loaded in my laptop, showed it to him, the guy looked convinced, but still out of his depths. Then, I politely asked if I should contact the nearest RAPCP branch to find out the details. The guy said OK.
    The following day I went to the RACPC branch, expecting that the people there would be in a better position to clarify matters. However, to my utter dismay the RACPC person said that SBI had increased the interest rates for MaxGain to 10.35%, and therefore it will not be advisable to go for Max Gain scheme. I mentioned their web-site, and a politer version of what he said meant web-site is not always up-to-date. There is no walking around that. So I came back, switched on my comp and started to write down: “Dear Ashal….”

    For the reference of other readers I give here the details given in the SBI website:

    The SBI website says:
    “SBI MAXGAIN – HOME LOAN AS AN OVERDRAFT
    Loan Amount
    Minimum Loan Amount: Rs.5 lacs
    Maximum Loan Amount: No Cap
    Interest Rate
    A premium of 0.25% over and above the applicable Home Loan interest rate for Home Loan > Rs.1 crore is payable.
    (Other terms and conditions are as applicable to regular Home Loan Scheme)”
    In the Interest rate section it also says:
    ” (With effect from 26.08.2014)
    Home Loan interest rate, irrespective of loan limit for women (sole or first co-applicant & first co-owner of property) is 10.10% p.a.
    For others (obviously us men and women as second co-applicant etc.) it is 10.15% p.a.”
    Under the “Maxgain above 1 crore” – header it says:
    “10.35% p.a. for women” and “10.40% p.a. for others.”

    So can you suggest what am I to do to avail of this Max Gain Scheme?

    Thanks, and sorry for the rather long post.

    Anirban

    1. ashalanshu says:

      Dear Anirban, please do not listen to SBI official. Pleas go ahead with SBI Max Gain.

      Thanks

      Ashal

  120. srini says:

    Dear Manish & Ashul – Please ignore my previous question. Looks like interest rate for 30L and 40L seems to be same now.. So no more dilemma for me 🙂 🙂

    Thanks a ton for your extremely useful article on sbi maxgain which I am sure helping scores of ppl like me.

    Thanks,
    Srini

  121. srini says:

    Dear Ashal & Manish – Could you pls give your opinion on this.
    I may have to go for 40L sbi max gain loan for home. I have 10L excess cash now. So would it be better for 30L loan and pay 10L directly to seller or would it be better to go for 40L loan and keep 10L as credit in max gain account? Given 30L interest rate is 9.95% and 40L interest rate is 10.15%, which one would be beneficial?

    Personally I would prefer to have additional liquidity of 10L given a choice. would benefits outweigh costs in this case?
    Thanks for your reply.

  122. Prasanth Varghese says:

    Hi Prasanth,

    I am constructing a house using sbi max gain loan. The loan is sanctioned but not taken(not credited to my account). Yesterday I gave a request to disburse first installment(9 lakh) but i need only 1 lakh from this 9lakh to meet my financial requirement.

    1. What should I do to minimize interst burden once 9 lakh is credited on my account?

    2. Do I need to give interst for the full amount (9 lakh) or for the partial amount(1 lakh)?

    Could you please advise me to take a decision on this?

    Thanks,
    Prasanth

    1. It will depend on the bank policy on how they calculated the EMI !

    2. ashalanshu says:

      Dear Prashant, If the requirement was just 1L Rs. as of now, why did you applied for disbursal of 9L? You w’d have to pay interest on 9L Rs. now. In case you do not need the 8L Rs. please park that back to Max gain to save on interest outgo.

      Thanks

      Ashal

  123. Anuj says:

    vwaman

    If your paying capacity permits, you can take as many home loans as you wish to. interest rate on one loan has no relation to interest rate on another loan. your new home loan interest rate will be (Bank Base rate plus spread). Currently this come to 10.15%.

    Similarly, you can take top-up on your existing home loan as well. Again, the top-up amount will be based on your paying capacity and the valuation of the property mortgaged against the existing loan. However, the interest rate on top-up is slightly higher than on normal home loan.

  124. NIRANJAN HR says:

    Hi,
    I have some doubts.
    I have purchased an underconstruction property (possession in dec 2015).
    Recently i took 1st disbursement .
    If i want to pay some part of principle, how to pay that? Ideally i should get MAX-GAIN account. But right now only loan account is visible in my savings account.

    Thanks

    1. Just visit bank and tell them you want to make prepayment, It will get deducted from your PRINCIPLE

  125. vwaman says:

    I have one more question..

    For my current MaxGain loan, can I get a top up loan ? The loan account is fully disbursed and I have already stared the EMIs

    1. Only SBI can see your case and comment on it

  126. vwaman says:

    I appreciate your effort and time for this forum. Its is indeed very helpful

    I have a SBI Maxgain loan fully disbursed with monthly EMIs being paid. Can I avail another SBI MaxGain home loan served in parallel with the first Maxgain home loan? If so, will the rate of interest be higher for the second MaxGain loan? Please note that I am already owning 2 properties and this will be the third property for which I am looking for a loan.

  127. Anuj says:

    Hi Ashal

    Thanks for the reply. My loan does not have any moratorium period. I see that the interest is still getting deducted from my OD account on the last day of the month, and the EMI is getting credited from savings to the OD account on 5th of very month. However I see no entry for principal reduction since my loan started on 18th June.
    Below is the summary of my loan account as of today (8th Aug). As you can see, there is no change in DP which has remained same at Rs. 18,77,000 since the date of disbursement.

    I checked with my home branch bank manager today. And he is also saying that the DP does not get reduced. I am totally surprised at the ignorance of the bank officials :(. Or is it that I am wrong somewhere??

    Description SBI H L MAXGAIN OD (DEC13)
    Name Mr. ANUJ
    Book Balance -12,42,254.50
    Available Balance 6,34,745.50
    Limit 18,77,000.00
    Uncleared balance 0.00
    Drawing Power 18,77,000.00
    Currency INR
    Rate of Interest (% p.a.) 10.15%
    Lien Amount 0.00

    1. ashalanshu says:

      Dear Anuj, my personal drawing power is coming down after each EMI credit. So the bank official is either ignorant or is not capable to handle queries.

      Thanks

      Ashal

  128. Prasanth Varghese says:

    Hi,

    I am going to take a home loan(SBI max gain) amount 17lakh. I am getting my salary on last working day in a month. Will loan prepayment date affect for salaried person to reduce interest rate?Which will be the appropriate loan prepayment date for a month to reduce interest? can we change loan due date of a month.

    Thanks,
    Prasanth

    1. ashalanshu says:

      Dear Prasanth, as your salary is coming in last days of month, you may opt first week days for your EMI.

      Thanks

      Ashal

  129. Nishit says:

    Hello,

    If i am not able to park any surplus amount, will that harm me in any way.

    I am planing to take a loan of Rs 22L for 30 yrs. and i am told that my EMI would be around 19550.

    My assumption was if i Park all my surplus amount i would be able to close the loan faster, But now i am lil confused.

    can you please tell me if i keep parking some amount regularly how will that help me close the loan faster.

    and what will happen if i am not able to park any amount.

    Thanks in advance.

    1. ashalanshu says:

      Dear Nishit, if you do not park any surplus, your loan ‘ll run like any ordinary loan. No problem to you. If you park any amount, it ‘ll result in interest saving and it ‘ll keep increasing (the surplus amount) automatically due to less interest deduction from your EMI. Due to this less interest pay out, the principal repayment ‘ll not change and loan ‘ll still run it’s full term.

      For better understanding you may check my Youtube videos on SBI Max Gain.

      Thanks

      Ashal

  130. Amol says:

    I have a MaxGain account, and currently not parking any surplus in it. If I started parking surplus money, the interest component will come down. Does it mean that principal component will increase? Currently I am paying 32,921 as EMI and principal component is very less (sometimes in few hundreds). If I put in surplus money in max gain, will it benefit me in increasing the principal component and allow me to save on 80C?

    1. ashalanshu says:

      Dear Amol, no, principal amount ‘ll remain same as per your loan amortization schedule. The saved interest due to parked surplus ‘ll become part of surplus amount for next month.

      Thanks

      Ashal

    2. I dont think so that just putting in max gain will help to save in 80C

  131. Anuj says:

    Hi Ashal

    Need your help and guidance.

    I have transferred my home loan from HDFC to SBI (Maxgain) in June 2014. Please see the summary (as on Aug 1, 2014) below. Total amount was Rs. 18,77,000.

    I see that my account statement shows Debit Interest on June 30th and July 31st. Also the EMI has been credited to SBI OD account from the savings account as per the date given by me (5th). However, the drawing power has still not changed. I had gone to RACPC and they showed me the scheduled amortization. According to the amortization schedule, the Principal component deduction was planned to be zero in July.

    Can you tell me on what date my Principal component should get deducted from the OD account (5th or 30th/31st)? Also, should there not be a reduction in Drawing power as I have in some of the posts above.

    The officer at RACPC also is saying that the excess amount paid in EMI (EMI – Scheduled principal component – Calculated interest component) goes towards reduction of principal outstanding and hence reduction in loan tenure. This is exact opposite of what I have followed from the posts in this forum. I am confused, please help me through this maze.

    I can send you my detailed account statement if that helps.

    Description SBI H L MAXGAIN OD (DEC13)
    Name
    Book Balance -12,34,295.00
    Available Balance 6,42,705.00
    Limit 18,77,000.00
    Uncleared balance 0.00
    Drawing Power 18,77,000.00
    Currency INR
    Rate of Interest (% p.a.) 10.15%
    Lien Amount 0.00

    1. ashalanshu says:

      Dear Anuj, loan term never comes down in Max Gain. It’s only the interest outgo, which changes due to our surplus parking. So the RACPC official erred in telling so.

      Regarding no debit from drawing power, what was the reason for the same? Was it, your loan is having some moratorium period?

      Thanks

      Ashal

  132. MG says:

    Case:
    # We have SBI MG loan taken in March 2011 ( 35 lakhs) for 1st house , taken possession in Apr 2011. We took advantage of scheme and parked around 20 lakh to reap reduced interest benefits. By July 2014, our ‘Book Balance’ had reduced to zero via regular EMI + parked surplus amount in OD.
    # We bought another house in July 2014 ( possession in Dec 16) by paying through OD account. Also we applied for reduction in drawing power to 19 Lakhs and EMI to around Rs20,000.
    Questions
    1. Understand that we can no more claim tax benefits for 1st house since we have passed the first 3years for tax deduction benefits on House loan interest EMI . Can we claim tax benefits for 2nd house ?

    Thanks in advance

    1. ashalanshu says:

      Dear MG, if you are paying interest on first house loan, you can still claim it.

      Thanks

      Ashal

  133. Ameya says:

    I have taken a housing loan from SBI under Max gain scheme and I must admit that I am really greatful to SBI for this. The scheme is extremely borrower friendly. I repay the loan whenever i have excess cash and withdraw whenever it is required. This saves interest and make funds available all the time.

    Thanks SBI for this scheme.

    Housing loan interest certificate is not available online under this scheme. If SBI can make this facility available, it will be great.

    Regards,
    Ameya Gatade

    1. Thanks for sharing your review !

  134. Anuj says:

    Manish

    1. But how do we define completion of construction?

    Completion of construction is legally defined by Completion Certificate that the builder obtains and hands over to the purchaser of apartment/house.

    However, sometimes the Completion Certificate may get delayed due to some minor additions pending before the buyer moves in. Eg: installation of fire safety systems. In such cases, you may treat the house construction as complete when the full payment of the house has been made to the builder and the builder issues you the Possession Letter.

    2. Also in my case if house construction gets completed by Dec’14 and I’m shifting to new house by June’15 then I can claim HRA till May’15 and section 24b as well for FY14.

    In the above case, you will be able to claim HRA till May’15.

    Since the construction will be completed by Dec’14. Your house should be treated as rented/deemed to be rented from Jan’14 to April’15. In this case, you will have to declare fair rental value of the house property and include that in your Income from house property section.

    However, Since you are planning to leave the house vacant only for 5 months and I am assuming that the house will actually not be rented out for these 5 months, you can state in your income tax returns that the could not actually be occupied by the you for this short period of time due to the fact that your business/profession did not allow you to physically relocate at such a short notice.

    Once you occupy the house in May’15: You will not be able to claim HRA deduction. You will be also not be able to claim deduction u/s 80C for Stamp duty and registration since these would have been paid by you in previous year as compared to the year for which the tax will be calculated. You will be able to claim “Loss on House Property” for interest paid on housing loan upto Rs. 1,50,000 “per” owner and loan applicant.

    1. Manish Chhajer says:

      Thanks again Anuj…You really helped me a lot.

      1. Manish Chhajer says:

        Hi Anuj,
        Can you pls answer my another query @ https://www.jagoinvestor.com/2013/03/income-tax-on-gifts-received.html

    2. No matter what, completion certificate is the only document which proves the completion !

  135. Anuj says:

    Manish Chhajer

    Let me try to answer your queries.

    1. My question is till what date I can claim HRA?
    You can claim HRA for the period you stay in the rented property. It does not matter whether your own property is ready for possession or not.

    2. And from when I’ll be eligible to claim interest amount paid via EMI under section 24B.

    You will be eligible to claim deduction of interest on house loan as soon as the construction of your house is complete. If you self-occupy your house upon completion of construction, you will be able to claim upto Rs. 1,50,000 deduction.

    If you do not self-occupy the house property, it will be shown/deemed as rented and you will be able to to claim the actual interest payable for the financial year.

    Regarding the interest that you will have paid till the time the construction of the house is complete: you can sum up the total value of such interest cost and claim it as deduction in 5 equal amounts starting from the year of completion of your house. The limit of Rs. 1,50,000 still applies if the property is self-occupied.

    1. Manish Chhajer says:

      Thanks Anuj for quick response. It has clarified my doubt to much extent.
      As you said completion of construction defines eligibility of section 24b. But how do we define completion of construction? Is it related to registration of house or complete disbursement of loan from bank or anything else?
      Also in my case if house construction gets completed by Dec’14 and I’m shifting to new house by June’15 then I can claim HRA till May’15 and section 24b as well for FY14.

  136. Manish Chhajer says:

    I’ve a query regarding tax saving via home loan.
    Currently I’m staying at rented house. I booked a under-construction flat. My loan started on 29th May’14 with SBI. It is expected that registration will be done by Dec’14 for the house.
    Possibility of shifting to house is either March’15 or June’15.
    My question is till what date I can claim HRA? And from when I’ll be eligible to claim interest amount paid via EMI under section 24B. Pls reply to my query for both possible dates(March’15 and June’15).

    1. ashalanshu says:

      Dear Manish, HRA benefit is there till you are actually living on rent. Home loan benefit is available once the possession is there with you for full Financial year.

      thanks

      Ashal

  137. Anuj says:

    Hi Ashal

    It was based on the information you have shared on this site that I decided to shift my Home Loan from HDFC to SBI (Maxgain). So, thanks a lot first of all.

    I need help on a couple of questions:

    1. I have been sanctioned a loan amount of Rs. 18,77,000 from SBI. However, by the time I got the disbursement, the outstanding balance at HDFC got reduced. The total amount thus disbursed from SBI was Rs. 18,25,300.

    My question is: Will I be able to transfer out the remaining amount, i.e. Rs. 51,700 from the OD a/c to savings a/c once I get the transaction rights. Or, do i need to talk to RACPC to disburse that amount.

    2. Related question is: should I talk to SBI RACPC to recalculate my loan terms (EMI) based on the actual disbursed amount. I think my EMI is currently being calculated on the Sanctioned amount. Or, do you think it does not make any difference as the interest charged will be on the Sanctioned amount minus the undisbursed amount, i.e., Rs. 18,77,000 minus Rs. 51,700.

    Awaiting your guidance

    Anuj

    1. ashalanshu says:

      Dear Anuj, you can request SBI to accept the disbursed loan amount as actual loan amount. Keep paying the regular EMI as it ‘ll result in interest saving to you.

      Thanks

      Ashal

  138. Senthil says:

    Dear Ashal,

    You are doing a great job.
    Here is my query:
    1) I had taken max gain loan in 2013 when the interest rate was 10.1%, but later it got increased to 10.4% which is what is currently effective for me.
    However the current interest rate for sbi home loan is 10.1 & the bank does not reduce it for existing loan holders.
    Does this mean if there is a one time spike to say 11% & then it comes down. the interest which we would pay be 11% from then on?

    2) I have a joint loan(me & my wife), however the EMI goes out from my account only. Does this create any problem in getting the interest certificate breaked between us and also if there is any problem while claiming tax benefit?

    3) What is the disadvantage in getting registration as per guidance value?
    Is it legal?

    Appreciate your response.

    Regards
    Senthil

    1. ashalanshu says:

      Dear Senthil, as your loan is more than 30L Rs. (you did not tell but I got it from your numbers), 10.4% is the lowest ROI for such loan amount. Why? The Base rate is 10% and your spread is 0.4% from base rate.

      Please ask your wife to park her share of EMI into your bank account.

      Regiatration should be done at market value to avoid future problem from taxation on capital gains if you sell out the house.

      Thanks

      Ashal

  139. arindad says:

    Dear all,

    I am an NRI planning to buy an Under Construction property for end use, which will be ready for possession by end of 2017.
    I am planning to do a down payment of 16 Lakhs and a avail a loan of 65 Lakhs.
    Its a time linked payment, After the initial down payment of 20% I have to pay next 3 EMI’s (9 Lakhs), thereafter I will be paying some 3 lakhs approx for every 2 months.
    I can place a surplus amount of close to 1 Lakh every month, in the max gain loan account.
    So please let me know which Home loan product is best.

    I have zeroed in on SBI Max Gain, as I can park surplus amounts and reduce my EMI’s., Please clarify my doubts.
    Doubts:
    ——–—-
    1. For example, I get the 65 L loan sanctioned and the bank pays 5 installments, now i get a lumpsum of 3 lakhs during the sixth installment,
    is it better to park the amount in MG or pay the builder directly?
    Put it plainly, Can I ask the bank not to disburse the money and pay from my pocket? Is there an advantage.
    1.1. And if I do the above some 5 times during the loan tenure, what would happen ?
    i.e, when I don\’t take the full sanctioned amount, will SBI allow me to use that money for other purposes?

    2. Or is it simply, best to park all the funds in MG and enjoy low interest?

    3. In case I am unable to Pay EMI at a point after say I have parked som 10 L surplus, Is it possible to transfer the surplus amount from my MG account? (Under Construction property). Or its not at all possible to take the surplus even for emi purpose?

    4. I am feeling that in my case Max gain has a very little advantage only, is it justified?

    Thanks

    1. ashalanshu says:

      Dear Arindad, please park your own money in bank and let it pay to builder from loan amount itself.

      Paying EMI is your responsibility and you need to keep that much money separate from MG account as you can not withdraw your own money during disbursement phase.

      If you feel MG is not right for you, please opt simple loan.

      Thanks

      Ashal

      1. Arindad says:

        Dear Ashal,
        Thanks for you response.
        I too felt in my case MG and the simple loan is almost the same.
        But can I withdraw the surplus parked during the construction phase (i.e during disbursement) once i register the property (i.e after disbursement)?

        If that is the case, then i will go for MaxGain, else please suggest me a bank which is good with handling prepayments, so that I can go for that.
        Awaiting response.

        1. ashalanshu says:

          Dear Arindad, in case of Max Gain, you can not avail transaction rights till final disbursal. All banks are same now on prepayment terms.

          thanks

          Ashal

          1. Arindad says:

            Dear Ashal/Manish,
            I have gone with SBI Max Gain HL only, The loan officer mentioned that, “Whatever the surplus that I park during the construction phase (or till the fill disbursement of loan) will directly go towards principal. i.e I wont be able to withdraw the parked surplus during construction phase after the full disbursement.”
            Is it correct?

            1. ashalanshu says:

              Dear Arindad, the surplus parked by you during construction phase is available for withdrawal post final disbursal and activation of transaction rights.

              Thanks

              Ashal

            2. Arindad says:

              Dear Ashal,
              Thanks for your quick response… I was worried about this clause and thought of investing the surplus in FD’s till construction is over by affording 1.15% extra (10.15% home loan – 9% FD) for liquidity.
              But now I think I will keep enough liquidity in my account or FD and park the extra amount in MG.

              Let me know if its a good idea

              Regards.

            3. ashalanshu says:

              Dear Arin, only point of importance, you can not withdraw your own money during under construction period. Once final disbursal is over, you can withdraw at your will.

              Thanks

              Ashal

            4. Arindad says:

              Dear Ashal,
              I have another doubt.
              I have a loan amount of 68L and as a part of first installments the bank has released 11L.
              My loan EMI 66K starts from 10th Sep. I have opted for FULL EMI.
              So out of this 66K the interest would be calculated for 11L only right?

            5. ashalanshu says:

              Dear Arindad, yes interest ‘ll be calculated only on 11L Rs., the disbursed amount.

              Thanks

              Ashal

            6. NO ,if its full EMI, then it will be on full loan amount I guess

      2. Anup says:

        Hello Ashal,

        I want to know, can NRI also apply for this maxgain home loan scheme from SBI.

        Regards
        Anup

        1. ashalanshu says:

          Dear Anup, yes NRIs are eligible for Max Gain home loan.

          Thanks

          Ashal

  140. nk says:

    hi ashal,
    please look on my account :
    Book Balance -11,72,989.00
    Available Balance 2,89,177.00
    Limit 14,62,166.00
    Uncleared balance 0.00
    Drawing Power 14,62,166.00
    Currency INR
    Rate of Interest (% p.a.) 10.15%
    Lien Amount 0.00
    A question is my loan sectioned for 15 LAKH but in limit and drawing power it’s showing on 14,62,166.00.
    why?

    1. Nilay

      You should actually ask this on our forum – http://www.jagoinvestor.com/forum

  141. Chinmay Gajjar says:

    Hi,
    I have MG account. As per my knoledge, the extra money paid other than regular monthly installment will not bring down my principal ammount but it only reduces the interest part. The principal ammount will reduce according to ammortisation schedule only. Hence this extra money paid cannot be claimed for incometax saving under 80C.
    When I asked for principal/interest certificate from my bank for last year, they provided the certificate which calculates as below:
    Total Principal Amount = (Monthly Installment x 12) – Total Interest paid during the year
    As per this certificate,
    Total interest component = 56592
    Total principal component = 159408
    Total ammount paid during the year = 216000 (which is 18000 x 12)
    Can you tell me how much ammount I can claim for availing tax benefit under 80C?
    I paid Rs. 5.4 Lacs as an additional amount during last year. Total loan ammount was 18.93 Lacs (Year 2009).
    Following is my latest account statement:
    >>Book Balance: – 1,72,004.00
    >>Available Balane: 15,66,919.00
    >>Limit: 17,38,923.00
    >>Uncleared Balance: 0.00
    >>Drawing Power: 17,38,923.00
    I doubt that the procedure followed by bank for calculating principal ammount is wrong & I argued with bank officer also. But according to bank officer it is correct.
    Please give your comment.

    1. ashalanshu says:

      Dear Chinmay, the reduction in your DP account is your actual repayment of home loan.

      Thanks

      Ashal

  142. Manish says:

    Can Any one help me in below sitiation

    I had taken 19.75L SBI maxgain home loan back in Mar 2010. By now I have only 1.9L rs are remaining as out standing. Now with EMI of 16.5 K my out standing will be Zero. (I am not sure about current instrest rate)

    Now Post completing this Loan I have another plan of buying a car via loan of 2L rs. (After resaleing my old car).

    Now Ques is ,Should take a fresh Car loan (approx 12%) or use maxgain overdraft a/c for paying cost of new car and extand the repayment of home load to one more year?
    Apart from income tax benefit how much I would be able to save by using overdraft a/c.

    Reason I don’t want to go for car loan.
    1) Very few company alow you to opt for one year repayment plan.
    2) Addtional processing fee for car loan
    3) 12% intrest.
    4) no 80 c benifit

    1. Hi Manish

      Putting this on our forum http://www.jagoinvestor.com/forum will fetch you a faster answer

      Manish

  143. Murali Krishnan says:

    Dear Ashal,

    I am regular follower of your maxgain comments. I too have a Maxgain account which was started from March 2013. I understood the maxgain product only through jagoinvestor.
    One more query from my side. Last week i got the interest certificate from the bank for financial ending Mar’2014.
    1. As per my understanding what ever extra amount we have and interest saved should be in ‘Available Amount’ , which can be withdrawn
    2. Logically in interest certificate for a financial year( for both normal term home loan and Maxgain), principal part should be same. . Right ?
    3. My monthly EMI is Rs.36100. But in my interest certificate total amount repaid is shown as Rs. 4,46,966 (Principal = 75,333, Interest =3,71,633). But my total amount paid through EMI is 4,33,200 (36100 * 12). Actually total amount repaid in interest certificate should be less than what we pay in yearly EMI. In my case it should be less than my annual EMI amount (ie 3,71,633) since we save some amount in interest part. Correct ?
    What is the reason for total amount in interest certificate is higher than the yearly EMI amount ?.

    Bank manager and my wife said the extra amount saved is adjusted with principal amount in interest certificate. I argued that it cannot be. But i didn’t able to give the reason for the total amount repaid (4,46,966 ) is higher than the yearly EMI amount (4,33,200).
    Thanks

    1. ashalanshu says:

      Dear Murali, please send me the account statement in exl. file as well as the interest certificate scanned document at my personal mail id. I w’d like to calculate on my own before making any comment.

      Thanks

      Ashal

      1. Murali Krishnan says:

        Hi Ashal,
        Thanks for your comments. Can you please give me your email id.

        Thanks,
        -Murali

        1. ashalanshu says:

          Dear Murali, I have contacted dear Manish to provide my e-mail id to you. You ‘ll get it very soon.

          Thanks

          Ashal

  144. Sriram says:

    Dear Ashal,

    Is there any calculator/excel that you have SBI Maxgain? If you don’t have something could you please point me to a reliable such calculator on the net.

    1. ashalanshu says:

      Dear Sriram, please visit my personal blog or contact me over personal mail.

      Thanks

      Ashal

  145. SPD says:

    Hi

    One builder tells me that SBI MG will make me pay registration on the market value of the house (price which I pay, let’s say it’s Rs 2500/sft) whereas other HFCs will let me register the flat on the govt guidance value in the region (let’s say it is Rs 1500/sft). Can anyone confirm this?

    1. No this is not true ! . You always pay registration charges on the REGISTERED VALUE you decide . But it will be minimum the govt guidance value , Its same for all lenders .

    2. ashalanshu says:

      Dear SPD, why do you want to register your property at Govt. Guidance value?Are you aware that it’s a long term loss making choice, if you opt to register not at market value but at Govt. Guidance Value?

      Thanks

      Ashal

  146. ddaseden says:

    Very clear and detailed explanation of the SBI Max Gain home loan scheme. Thank you.

    1. ashalanshu says:

      Dear Ddaseden, thanks for your praising words.

      Thanks

      Ashal

  147. Anbu says:

    Hi,
    I have max gain a/c. Interested is debited end of every month (30th or 31st of each month) and my EMI is credited on 11th of every month. will there be any interest levied between the balance at end of month after interest has been debited until my EMI is credited the subsequent month? is their any advantage in preponing my EMI to 5th of every month to save on interest?

    1. ashalanshu says:

      Dear Anbu, interest is calculated on each day basis. So if you prepone your EMI from 11th to 5th, the adjustment in drawing power ‘ll happen early as well as the interest part of EMI ‘ll remain in account for 6 days more, thus interest saving ‘ll be there.

      Thanks

      Ashal

      1. Anbu says:

        Thanks Ashal. I went to RACPC and changed the EMI date to 5th of every month. I actually wanted to change it to 2nd of every month but RACPC told me that the earliest they can do is on 5th of every month. I argued that EMI can be given on any date but still they said its their process. cant SBI not accept EMIs on 2nd of every month? do you know of anyone have EMI date before 5th? please advice.

        1. ashalanshu says:

          Dear Anbu, please be happy with 5th asEMI date. 🙂

          Yes SBI normally does not entertain EMI dates before 5th of every month.

          Thanks

          Ashal

  148. Gopi says:

    I have a question on disbursement on MG.
    I got an approval of 20L.
    I took 15L initially and 5 lakhs are yet to be taken from bank.
    Is it possible to do an online transfer to my developer to avail the complete disbursement or is it mandatory to visit the RACPC to get the rest of the amout

    1. ashalanshu says:

      Dear Gopi, you need not to visit RACPC for cheque or draft collection. Your developer should contact directly to SBI either loan serving branch or RACPC with a demand letter for remaining loan amount disbursal. SBI ‘ll do it on it’s Own.

      Thanks

      Ashal

  149. Bharathi Balaji says:

    Hi Sir,
    Your article on SBI MG is of great help to identify the product. I have a question.
    I am planning to do a balance transfer from other Bank (outstanding say 25 laks) and also i am planning to request topup loan in my MG. Whether i am eligible to claim income tax benefit for the interest on the top-up loan also.
    Could you please clarify. Kindly confirm how does this work?
    Thank you in advance.

    1. ashalanshu says:

      Dear Bharathi, what ‘ll be the end use of top up loan?

      Thanks

      Ashal

  150. Bhavin says:

    Dear Manish/Ashal,

    Here is my case. I had taken SBI Maxgain loan. the loan was disbursed (Rs 19,12, 151)on 7th Oct and it was a take over case. So it was fully disbursed. After that I continuously parking my extra money in this account. At present after 6 EMI & parking the addtional amount, the drawing power is not getting reduced its still same as the loan amount. I contacted the Bank and I was told that Book Balance is showing the balance loan amount and Drawing Power is what you can withdraw from your account if its required. Also by using the Calculator shared over here, i found that the Debit of interest is almost the same as calculated in the calculator.

    Kindly help
    Description SBI H L MAXGAIN AUG12
    Book Balance -16,06,996.50
    Available Balance 3,05,154.50
    Limit 19,12,151.00
    Uncleared balance 0.00
    Drawing Power 19,12,151.00
    Currency INR
    Rate of Interest (% p.a.) 10.25%
    Lien Amount 0.00

    Thanks & Regards,
    Bhavin

    1. ashalanshu says:

      Dear Bhavin, please contact RACPC to get it rectified. Drawing Power should come down with each EMI.

      Thanks

      Ashal

      1. Bhavin says:

        Dear Ashal,

        Thanks. I will contact RACPC. But now i have doubt how will they rectify it and how should i be assured that whatever there rectification is correct because in this six months i have deposited and withdrawen so many times. Could u please suggest?
        Thanks & Regards,
        Bhavin

        1. ashalanshu says:

          Dear Bhavin, no probolem ‘ll be there in Drawing Power reduction as it ‘ll happen as per your loan amortization schedule.

          Thanks

          Ashal

  151. Gopal Mahajan says:

    SBI max gain loan : 1700000/- dated Apr’11
    EMI : 15800/-
    Self contribution (extra) : 120000/- in dec’13

    SBI interest rates were till last month was 11%
    Today, they changed it to 11.5% without any indication.

    EMI payed regularly but still this hike in rates..

    Can anybody face the same situation, what to do in that case..

    Manish, please help

    1. ashalanshu says:

      Dear Gopal, please contact your loan serving branch and ask for reduction in rate of interest by paying a conversion fee. You ‘ll get 10.15% ROI after the conversion. the fee ‘ll be 0.56% of your as on date drawing power.

      Thanks

      Ashal

  152. Pekal says:

    Hi,

    I just started to pay EMI for my SBI Home loan for 56,00000. As the first installment payment was done this month, I asked for the Interest Certificate to avail Tax benefits.

    I was very surprised by the fact that, the amount shown in the Certificate is not same as the one in the schedule. In fact, most of the EMI amount is shown as principal amount. I was under the impression that in the initial stages majority of the amount in EMI is accounted for interest charges and not principal.

    Any light on this matter will be help me to understand this behavior,
    Pekal

    1. ashalanshu says:

      Dear Pekal, your loan is partly disbursed or full disbursed as of now?

      Thanks

      Ashal

      1. Sam says:

        Likely that it is partial. This is the feedback that I got from SBI as well (loan is in approval process now). The interest is calculated only on the amount disbursed.

    2. But you should be happy that its getting deducted from PRINCIPAL , its in your favor , right 😕

  153. Prashant says:

    Hi,
    I am also customer of SBI max gain home loan.

    Following is my situation:
    Description SBI H L MAXGAIN AUG12
    Book Balance -23,03,161.00
    Available Balance 2,62,550.00
    Limit 25,65,711.00
    Uncleared balance 0.00
    Drawing Power 25,65,711.00
    Currency INR
    Rate of Interest (% p.a.) 10.25%
    Lien Amount 0.00

    What is meant by drawing power? I am in need of some money to purchase a plot. So can I withdraw Rs 20 lahks from this account?

    Prashant

    1. ashalanshu says:

      Dear Prashant, Drawing power is your as on date actual outstanding loan amount. From the above account, you can only withdraw the available balance amount which is 262550 Rs. in your case.

      Thanks

      Ashal

  154. suchitra says:

    Dear Ashal,

    I hold a maxgain HL OD account. I have been paying Rs. 33150 as EMI for the past 27 months (my available balance is 0 at present). Now I have got some lumpsum amount (50K) that I want to park as surplus in my OD. Since i have recently activated the trasaction for my MG account, on a trial basis, i transferred Rs 1000 to the MG. The amount was transferred, however, it is being shown in my credit balance and still the Available Balance column shows 0.00.

    As per my understanding, the Available Balance should be shown as Rs. 1000.
    Request you to clarify the same.
    Other info: loan EMI is disbursed from my HDFC salary account on the 10th of every month. I transferred this Rs 1000 from my HDFC salary account as NEFT to MG ac on 3rd of this month.

    1. ashalanshu says:

      Dear Suchitra, please share your account statement with me from day one of your loan in exl. format over my personal e-mail. Without looking into your account I can not comment the exact reason.

      Thanks

      Ashal

  155. Sankar says:

    Hello Ashal,

    I dont know much about this home loan stuff

    Recently my friend took MG home loan from SBI and he needs to submit interest certificate for IT purpose.
    It seems that for MG account the interest certificate is not available online.
    Can you please tell me what is the procedure to get that as early as possible.

    Thanks in advance

    1. ashalanshu says:

      Dear Sankar, please avail the same from the loan serving branch. In case of Max Gain, the interest certificate can not be generated online as SBI has disabled for the fact that Interest figure ‘ll not be as per loan amortization schedule.

      Thanks

      Ashal

  156. Revathi says:

    Thank you so much Ashal.

    1. ashalanshu says:

      Dear Revathi, it’s my pleasure.

      Thanks

      Ashal

  157. Revathi says:

    We are planning to take 42 Lakhs loan in SBI Maxgain Scheme. The first loan disbursal will be 30L in March 2014 and construction will be over by December 2014.Suppose I opt for full EMI from day 1.

    Total Loan Amount= 42L
    Amount disbursed in March 2014=30L
    Full EMI paid from first month= Rs 42000

    Interest on disbursed 30L =25000
    Principal repaid on disbursed 30L= 5000

    1) According to the SBI MaxGain Video on You Tube,the remaining 42000-(25000+5000)=12000 will be added to available balance. I did not understand that part. Does it mean that I can withdraw that 12000 at any point of time?

    2)If I opt for full EMI from Day 1, Will I get transaction rights on OD account from Day 1 itself,even if the full disbursal is not yet done? Can I start parking surplus in OD with full liquidity?

    3)Can you explain how the bank will deduct EMIs from me? Full EMI on one day or Principal on EMI date and interest on the last day?

    4)I read in a comment that fixing the EMI date early in the month is benefitial. Can you explain how?

    1. ashalanshu says:

      Dear Revathi, let me try to answer your queries.

      1. Yes you can withdraw that 12000 Rs. saved interest amount but it ‘ll be available to withdraw only when the full and final disbursal is over and transaction rights are available to you.

      2. No, Transaction rights ‘ll be given only after full and final disbursal. You may park the surplus amount in between but liquidity ‘ll not be there.

      3. On the EMI date, EMI amount ‘ll be debited from your bank account, notified by you for the purpose. EMI ‘ll be credited into Max Gain account. Principal part of EMI ‘ll be adjusted towards basic loan and your drawing power ‘ll come down. Interest part ‘ll remain there as it is and on the last day of the month, the actuyal interest based upon the calculation of surplus balance maintained by you, ‘ll be debited. Any saved interest ‘ll become part of available balance for next month’s calculation.

      4. An early EMI date means, your basic interest part of EMI ‘ll remain as surplus for more days in the Max Gain account and this ‘ll also save a bit of interest.

      Thanks

      Ashal

      1. Revathi says:

        Thanks for your prompt reply. You answered my queries very clearly.

        The criteria for getting transaction rights on OD account is just the “full disbursal of loan” ? Or is it the registration of the property ?
        In my case, I expect final disbursal in September (at the time of possession for interiors), but registration will be in Nov. So when will I get transaction rights, in Sept or Nov?

        1. Revathi says:

          Please excuse me if these questions sound redundant. 🙂
          After getting the transaction rights on OD :
          1)Suppose I am paying 30,000 EMI(5000 principal and 25000 interest) on 1st of every month. So after adjusting 5000 principal towards DP,will the 25000 interest component paid by me be shown in available balance till last day of the month? Will I be able to use that 25000 in case of my need?
          2) Suppose I am parking all my surplus amounts in the OD account. Can I give standing instruction to transfer my EMI from the OD account to SB account just ONE day before the EMI date? In this case does it matter when my EMI date is? Because the money used for EMI is in the OD account almost throughout the month,except for that one day. Please correct me if my understanding is wrong! 🙂 )

        2. ashalanshu says:

          Dear Revathi, full and final disbursal is basic requirement to avail transaction rights but some times SBI staff asks for property registration as well as possession also. If such case happens with you, please ask the SBI staff politely to show you the rule book for Max Gain.

          So in my personal opinion, you should be able to get transaction rights in Sept.

          Thanks

          Ashal

          1. Revathi says:

            Please excuse me if these questions sound redundant. 🙂
            After getting the transaction rights on OD :
            1)Suppose I am paying 30,000 EMI(5000 principal and 25000 interest) on 1st of every month. So after adjusting 5000 principal towards DP,will the 25000 interest component paid by me be shown in available balance till last day of the month? Will I be able to use that 25000 in case of my need till end of the month?
            2) Suppose I am parking all my surplus amounts in the OD account. Can I give standing instruction to transfer my EMI from the OD account to SB account just ONE day before the EMI date? In this case does it matter when my EMI date is? Because the money used for EMI is in the OD account almost throughout the month,except for that one day. Please correct me if my understanding is wrong! 🙂

            1. ashalanshu says:

              Dear Revathi, here are the answers to your queries.

              1. Yes the 25000 Rs. interest amount ‘ll remain part of Available Balance till last day of the month and in between you can withdraw it as per your need.

              2. Yes, just for your information – I’m using it exactly the same way you are asking for. Just to be on safer side, I’m transferring EMI 3 days earlier so that in case of SI failure, I’m well aware in time and can take corrective action.

              Thanks

              Ashal

            2. Revathi says:

              I am back with another query 🙂 Sorry if the question is too lengthy!

              The SBI agent gave me the amortization sheet for Maxgain. I was just filling rough values appropriate to us (Principal, how much we can park etc).
              When I tried with 25 years tenure and 30 years tenure with all other parameters remaining same I observed the following:

              1.Difference in EMI in two cases=1400
              2.Difference in Total Interest Paid in two cases = 1L
              3.Book Balance becomes zero in 9 years 3 months for 25 year tenure and 9 years 7 months for 30 year tenure. I will be effectively paying interest for 4 additional months in case 2.

              My conclusions:
              I will be paying additional 1L interest if I opt for 30 years.

              If opt for 30 years tenure, my monthly EMI will come down. But if I keep the remaining surplus in OD, it is as good as repayment.

              Can you please throw light on the pros and cons of extending loan tenure. Is it a good idea to go for the maximum tenure or is it good to close the loan as early as possible?

              Please help me out in choosing the tenure wisely.
              Thanks in advance

            3. ashalanshu says:

              Dear Revathi, please opt the repayment term as per your payback capacity. Please do note, the EMI does not change much between 25 to 30Y term. Hence it’s advisable to opt for 25Y term.

              Thanks

              Ashal

  158. Praveen Jayachandran says:

    Hi,

    I’ve just taken a loan under Max-Gain. My property is Under-construction and possession is expected in 6 months.

    I’ve planned to do the below.

    Open a SBI savings account along with the loan account.
    Convert the SBI savings account to a salary account.
    Transfer the monthly EMI from the savings account to the loan account on the salary credit day (usually last working day of the month) for the purpose of interest savings.
    Transfer back the EMI amount from the loan account back to the savings account one day prior to the EMI date every month.

    Now my question is, since my property is under construction, will I be able to do a TRANSFER of the money from the loan account to the savings account? I know we cannot withdraw any money from the loan account till the final disbursement. But Can I do a netbanking transfer of the amount from the loan to savings account and vice-versa?

    And any other ideas to maximize interest savings other than the this one?

    Thanks in advance,
    Praveen Jayachandran.

    1. ashalanshu says:

      Dear Praveen,no matter it’s within your own account or to any 3rd party account, you can not transfer out from Max Gain.

      Thanks

      Ashal

  159. govindarajan says:

    I WOULD LIKE TO KNOW WHETHER THE INTEREST SAVED AND CREDITED TO MAXGAIN A/C IS TO BE SHOWN AS INCOME TO BE TAXED IN I.T.RETURN.

    1. ashalanshu says:

      Dear Govindrajan, The saved interest is not an income hence question of reporting does not arise.

      Thanks

      Ashal

  160. Sunil Bajaj says:

    Hello..
    I borrowed 26.5 lakh max gain home loan in 2012.
    Bank given only 26 lakh to builder as our sell deed completed.now question is can I get my rmaining 50k back or can I ask bank to charge interest only for 26 lakh?

    1. ashalanshu says:

      Dear Sunil, as 50K amount has not been disbursed, it’s still lying in your loan account. Hence you are not paying interest on this 50K amount. If you do not wish to use this 50K amount, you should ask your loan serving branch to adjust the amount towards basic loan.

      Thanks

      Ashal

    2. Obviously . If 26.5 lac is sanctioned, then you should get all 26 lacs , enquire with bank on this

  161. sumidinesh says:

    Good one..I recently took maxgain from SBI..Would be happy if you share the comments on the below..

    Mine is a Take over loan (HDFC to SBI)
    1.Sanctioned amt (Drawing Power) is 43,25,000/- But the actual i took for HDFC closure is 41,00,000/- ..But the arrangement letter and mortagage is done for 43,25,000/- ..I wont be taking the balance 2,25,000/- from SBI..What should i do..this amount is parked in AB(Available balance)..In this scenario Do i continue the same ? Will i get interest for 2,25,000/ month on month ..

    OR this scenario would be considered as PARTIAL DISBURSEMENT ? SO NO INTEREST and I can take that money ?

    Please suggest

    1. ashalanshu says:

      Dear Sumidinesh, You ‘ll not get any interest on 225000. Actually you ‘ll be paying les interest on 4325000 Rs. due to AB of 225000.

      Please infomr SBI that you do not want to withdraw 225000 Rs. and treat 4100000 Rs. as final disbursal. So that you can avail transaction rights.

      Thanks

      Ashal

      1. Dinesh says:

        Thanks Ashal

        Actually I am bit confused.After paying my 1st emi my Available balance is increased to 2,30,009 from actual 2,25,000. The difference amount 5009 i thought its interest ? I took the disbursement on Jan 3rd and 1st EMI date is 5Feb(yesterday)..EMI amount fixed for me is 64,262 ..

        Description SBI H L MAXGAIN OD (DEC13)
        Book Balance -40,68,802.00
        Available Balance 2,30,009.00
        Limit 42,98,811.00
        Uncleared balance 0
        Drawing Power 42,98,811.00
        Currency INR
        Rate of Interest (% p.a.) 10.15%
        Lien Amount 0

        Drawing power earlier was 43,25,000 ..Now after paying 1st emi its changed to 42,98,811 ..Difference is Rs 26189 …Is this the Principal portion from my EMI deducted ?
        What is the extra amount in the AB 5009 ?
        Also what do you mean by transactional rights ?

        Thanks in Advance
        Dinesh

      2. sumidinesh says:

        Thanks Ashal
        Actually I am bit confused.After paying my 1st emi my Available balance is increased to 2,30,009 from actual 2,25,000. The difference amount 5009 i thought its interest ? I took the disbursement on Jan 3rd and 1st EMI date is 5Feb(yesterday)..EMI amount fixed for me is 64,262 ..
        Description SBI H L MAXGAIN OD (DEC13)
        Book Balance -40,68,802.00
        Available Balance 2,30,009.00
        Limit 42,98,811.00
        Uncleared balance 0
        Drawing Power 42,98,811.00
        Currency INR
        Rate of Interest (% p.a.) 10.15%
        Lien Amount 0
        Drawing power earlier was 43,25,000 ..Now after paying 1st emi its changed to 42,98,811 ..Difference is Rs 26189 …Is this the Principal portion from my EMI deducted ?
        What is the extra amount in the AB 5009 ?
        Also what do you mean by transactional rights ?
        Thanks in Advance
        Dinesh

        1. ashalanshu says:

          Dear Dinesh, yes 26189 Rs. has been adjusted towards basic loan from your EMI. Yes 5009 Rs. is the interest saved from 2 things. Instead of 4325000 Rs. your actual interest is calculated on 4100000 Rs. Also in jan, the actual disbursal happened on 3rd jan, so no interest is there for 1st and 2nd Jan. hence your interest is calculated for 4100000 Rs. for 29 days.

          Transaction rights are to be used to withdraw your own money from OD account as and when you need so.

          Thanks

          Ashal

  162. LAXY says:

    Hi Ashal,

    From the date i started my MG A/C emi, the priniciple amount is accumalted as available balance based on which now interest calculation is goin on, which is around 90k, plz let me know how to pre-pay the amount? is it possible online? or have to visit branch /RACPC?

    1. ashalanshu says:

      Dear Laxy, in case of MG, the principal is paid back through Drawing Power reduction. If you want to repay extra, just like your normal home loan, you need to contact your loan serving branch. But do note in this case, you ‘ll lose the liquidity of your amount as you can not claim it back in case of any need.

      Thanks

      Ashal

  163. Amaresh says:

    Thanks for the wonderful article Manish, Ashal
    One query I have : Why do we need to schedule transaction of EMI amount from MG account to SB account ? Shouldnt it be reverse way, from SB to MG account ?

    ++++++++++++++++
    Keep this buffer amount also in your MG account along with your routine surplus amount. now use the power of net-banking of SBI for your own good & create a schedule transaction of your EMI amount 28951 Rs. (in the above example) to be transferred on 13th of every month from MG account to SB account. At a time you can schedule for next 12 months by using standard instruction. So it’s technology that’s helping you.

    1. ashalanshu says:

      Dear Amresh, that’s to use the power of netbanking in our favor. Normally people keep 2-3 month’s EMI buffer in SB account. I’m asking to park the same buffer in MG and 2 days before the EMI debit date from SB to MG, I’m asking to transfer this EMI amount from MG to SB, so that on the date of debit, EMI money is availble there. As this EMI buffer amount is also parked in MG, it ‘ll also help to save the interest outgo .

      Thanks

      Ashal

      1. Amaresh says:

        OK got it. Thanks a lot for the prompt reply, you guys are doing an awesome job.

  164. Dinesh says:

    Thanks for the detailed explanation.

    Can i withdraw both the Parked Surplus and interest saved from my OD account at any point of time?

    1. ashalanshu says:

      Dear Dinesh, yes is the answer.

      Thanks

      Ashal

  165. layman says:

    Home documents damaged by SBI. I availed a home loan after several visits to SBI. It is a typical govt organization. I pre closed the loan and when I went to collect the original sale deed documents, it was damaged. I requested the bank to provide me in writing and get attested copies from relevant authorities. Instead of helping they deny doing any damage, very irresponsible. I have not accepted the damaged documents and still making chakkars to sbi office. Planning to approach consumer court. Based on my experience it is better to avail from private banks even if it is bit costly, but it will be hassle free and good customer experience.

    1. ashalanshu says:

      Dear Layman, did you file any written complaint to SBI for the same?

      Thanks

      Ashal

    2. You should better file a RTI and ask for things . Also yes, you should approach consumer court on this !

  166. Deepak Jaiswal says:

    Hi,
    If I am in imaginary situation i.e. keeping 20L in Max Gain account for 20L loan Drawing power amount and if I don’t wish to close the loan account for next 5 years from now.
    Then will there be any benefit for keeping additional money in Max Gain or it’s better to move additional amount i.e (amount parked more than Drawing power amount) to Savings Bank account ?
    Point is to know,if i can earn any interest benefit on my deducted EMI’s/Parked surpluss amount when Book Balance amount is +ve figures in max gain account.

    Regards
    Deepak

    1. ashalanshu says:

      Dear Deepak, you ‘ll not earn any interest on positive book balance, hence it’s in your interest that you remove your positive balance from OD account.

      Thanks

      Ashal

  167. kharawanehn says:

    Hi Ashal,
    My ECS date for SBI Max gain home loan is 20th of every month. I wanted to shift it to 5th.
    I enquired with SBI, they said you can shift to 5th or 12th of every month.
    My question is does this have any other effect/consequences if I change my ECS date?
    Also, in case of Max gain, I think extra repayments done (apart from EMI) are not considered under 80C for principal repayment. Please confirm.

    Thanks.

    1. ashalanshu says:

      Dear Kharwane, in case of Max Gain only the actual reduction in your drawing power is eligible for section 80C benefit. Any surplus parked by you is not adjusted towards basic loan, hence not eligible at all.

      Regarding your EMI date change, as the interest part of your EMI ‘ll remain few more days in MG account, it ‘ll also help to save on interest outgo.

      Thanks

      Ashal

      1. Hansraj N Kharawane says:

        Thanks for your reply Ashal.
        I must say first it wouldn’t have been possible to understand
        Max gain without your help.

        To understand it correctly, do you mean that it is good move
        to change the ECS date to 5th of every month?

        1. ashalanshu says:

          Dear Hansraj, let me put a crude example to you. Say your EMI is 25000 Rs. and out of this 5000 Rs. is meant for principal and 20000 Rs. meant for Interest.

          Now if your EMi date is 20th – The interest part 20000 Rs. of your EMI ‘ll remain in account for next 11-12 days (30-31st day of the month normally).

          If EMI date is 5th, it means the same interest amount of 20000 Rs. ‘l remain in account for next 26-27 days.

          As this amount is there in OD account, it ‘ll impact the calculation of final interest to be charged on the last day of the month. Hence an early EMI date ‘ll help you to save more money towards interest outgo.

          Thanks

          Ashal

          1. Hansraj N. Kharawane says:

            Thanks Ashal !!!

  168. ankush says:

    Dear Ashal
    I put some surplus in my MG loan account. But the saving on my interest is not showing in surplus amount ? Can you please clarify this ?

    1. ashalanshu says:

      Dear Ankush, can you share your account statement with me on my personal mail ID?

      Thanks

      Ashal

  169. Varun Mehta says:

    Hi,

    I have just shifted my loan from Axis bank to SBI maxgain.
    I kept a balance of 65000 in my account last month.
    My emi due date is 20th of month. I am seeing an entry with comment “DEBIT INTEREST” in my statement on 31st December. And an amount of around 20000 is deducted from my available balance which is now 45000. So what happens to this money that is gone now??

    Thanks,
    Varun

    1. ashalanshu says:

      Dear Varun, the amount is meant for interest for the loan used by you for the number of days in Dec 2013.

      Thanks

      Ashal

  170. kiran says:

    Dear Ashal,

    Today I checked my HL account and got 2 doubts.

    1. As per the below explanation if we park 2lakhs at the end of month surplus amount is 201667/-. Do you mean to say that we can with draw all this 201667/- at any time after first month? Please clarify.

    ***********************************************************************

    Your 2L Rs. are parked in that OD account & the interest for the very first month ‘ll be calculated on 28L Rs. & thus it ‘ll be 23334 & thus there‘ll be an interest saving of 1667 Rs. which‘ll remain available in your OD account as surplus along with your parked surplus 2L Rs. so for next month, the parked surplus amount ‘ll be 201667 Rs.
    Please do note in case 2 above, Your loan term is still 240 months but the saving of interest ‘ll keep on increasing on mly basis from the parked surplus & of course the liquidity of those 2L Rs. is there.

    ************************************************************************

    2. My HL account details are as follows as on date. I have taken loan of 29L in Feb 2013 and from April 2013 I keep on paying 20,000/- every month as pre EMI and from Dec 2013 onwards 28800/- as full EMI. My question is why Limit and Drawing power is showing still 29L. From your other posts I understand that these two (Limit & Drawing power) must keep on decrease every month and must show latest outstanding. Please let me know in detail about this sir.

    #######################################
    Account Number 00000032815018596
    Description SBI H L MAXGAIN AUG12
    Name Mr. CHANDALURI KIRAN KUMAR
    Book Balance -28,40,447.00
    Available Balance 59,553.00
    Limit 29,00,000.00
    Uncleared balance 0.00
    Drawing Power 29,00,000.00
    Currency INR
    Rate of Interest (% p.a.) 10.25%
    Lien Amount 0.00

    #########################################

    Thanks inadvance
    Kiran

    1. ashalanshu says:

      Dear Kiran, yes you can withdraw 201667 Rs. in 2nd month. Please check with your loan serving branch why the Drawing power has not been reduced after the payment of EMI in Dec 2013? In all probability, the SBI software has erred in not reducing your DP.

      Thanks

      Ashal

  171. shantnu says:

    Hi,
    I have purchased an underconstruction property (possession in dec 2015).
    I have applied for sbi maxgain loan of 30lacs.
    Initially i was opting for 15 years loan term as I can pay the prevailing emi but one of my friend suggested that it would be better if I take the maximum tenure(25 years) and prepay the emi as I would pay it as in for a 15 year loan term.
    He said by increasing the tenure it will result in lower emi and will give me more flexibility to pay in excess and this excess payment will reduce the interest and principal .

    For example , If for a 25 years tenure loan has 9000 as emi ( 8500 interest and 500 principal ) and if i pay 30000 as EMI this will reduce the principal by 30000-8500 = 21500 .

    My question is whether the option he suggested to me is correct ?
    Is it more benefitable for me to take loan for longer tenure(25 years ) instead of 15 years ?

    1. ashalanshu says:

      Dear Shantnu, please opt the loan term as per your repayment capacity. Opting for a loan for longer term ‘ll result in higher over all interest outgo, if one is not disciplined to repay excess amount.

      Thanks

      Ashal

  172. Tutun says:

    Hi all,

    I have a real example to share with you, where during a scrutiny, the Deputy Commissioner of Income Tax, in Kolkata, is claiming that the interest charged for Maxgain is not eligible for the 1.5 Lac benefit because of the OD nature of the loan. He looked at the various transactions I made on that account and laughed and said that this is ridiculous that I am claiming tax benefit for this. I am at a complete loss since this will have a huge and devastating impact for me over many years. I have paid over 1.73 Lacs as interest during a FY.

    Can anyone share any Tax Law that I can quote to the officer?

    1. ashalanshu says:

      Dear Tutun, on what basis the Commisioner in question is not allowing the benefit of section 24 (b) for interest on home loan to you. The product in question is an overdrafdt facility linked with a home loan so merely as per his own explaination the person (commisioner) can not deny you the legal benefit.

      No where in the rulebook of Income Tax is written that OD facility is not eligible for Home loan related section 24(b) interest benefit. If you feel, the commissioner is not handling your case, properly, please file a written complaint to his higher up.

      Thanks

      Ashal

  173. kiran says:

    Dear Ashal Jauhari sir,

    Hats off to you for your patience, Thank you very very much for detailed article, I have taken home loan from SBI(max gain) in feb 2013. I have completed registration and activated max gain facility 2 days back (Dec 24th, 2013). Today i with draw small amount from my HL to SB account to confirm the transaction. So all set right for me and from now onwards i can credit and debit amount from my HL account. Your article given very very clear picture to me on intrest accumulation on surplus amount. Till now i was under impression that intrest accumulated due to surplus amount will be used to reduce the outstanding principal amount but now with your article it is clear to me that the intrest from surplus amount will keep on adding to surplus amount and thus our withdrawl balance will keep on increasing.

    Many many thanks to you,
    Kiran

    1. ashalanshu says:

      Dear Kiran, thanks for your praising words. Please feel free to ask for any query in future as and when you need so.

      Thanks

      Ashal

  174. Nishant says:

    Hi Ashal

    Thanks for the article and your incredible patience on responding to the long list of queries here.

    I have a query re: the pre-emi phase that starts from first disbursal from bank(to builder) till the final_disbursal.

    Say, this period extends over 3 years and disbursals occur quarterly. Does the MaxGain benefits apply during this phase ? I mean , Can I start parking some surplus to keep the pre-emi(which is only interest) bit lower for an year and then ask bank to “freeze” the loan to the final sanction amount at some comfortable stage (like after 1 year or so) to start Full EMI.

    Thanks

    1. ashalanshu says:

      Dear Nishant, yes you can do that but do remember, you can not withdraw your own money till final disbursal (the reduced one, agreed by you and bank on your request).

      Thanks

      Ashal

  175. RG11 says:

    Hi MANISHs,
    Thanks for you valuable inputs, very helpful and I finally took the loan from SBI.

    My current scenario is ” I got the loan sanctioned of 29lakh, and I disbursed 25lakh. And I have alreday paid 4 lakh from my own funds, and I dont need any further dirbursement.”

    And my two questions are:
    1. The amout I initically deposited the 4 lack from my own resources, shall I disburse it from the bank (bank is ok to give the disbursement), my question is will it be benefitical to take from bank as disbursement of 4 lakh and put in overdtaft, this way I can use this amout when I need, and also take the advantage of tax benefits on EMI if I withdow the money, will there be any negative impact of doing this? or I should not do this(not disburse the amount)?

    2. If I dont disburse it , then how to initiate the OD facility?

    1. ashalanshu says:

      Dear RG11, you mean to say, you parked your own 4L amount in Max Gain and now want it to be disbursed as part of final disbursal?

      Thanks

      Ashal

    2. If you need some buffer money in emergency situation, then it makes sense to take over draft, because anyways you will pay the interest .

      Else just leave it

  176. Lalit says:

    Dear Manish,

    Thanks a lot for sharing this information. Before going for SBI Max Gain I had read your entire article and was much satisfied. Now as I am new to Max Gain and have started looking my account statement I have a difficulty and request your help. I deposited 3 lacs in my Max gain account which got reduced by 23000 interest and then 29000 installment and now the amount shown as available balance is only Rs. 2,48,000. It seems that whatever surplus fund is parked in Max Gain is reduced by the interest amount first and then they expect us to fund EMI separately which again reduces the available amount as we need to transfer the amount from OD to Saving account. This is actually reducing my liquidity.
    Is this the correct way it operates or there is some problem with my case? Please give your expert advice ..

    1. ashalanshu says:

      Dear Lalit, can you share your account statement with me over personal mail ID. I’m unable to understand your query, that’s why asking for account statement.

      Thanks

      Ashal

  177. ssingh says:

    Hi Ansal,
    Small help is needed to understand why has my Drawing power got reduced?
    below is statement:

    Sanctioned Loan amount was 24,90,000/-

    Book Balance -6,22,784.00
    Available Balance 18,56,745.00
    Limit 24,79,529.00
    Uncleared balance 0.00
    Drawing Power 24,79,529.00
    Currency INR
    Rate of Interest (% p.a.) 10.25%
    Lien Amount 0.00
    ————————————————————————-
    Pre-payment Made = 0.0 INR
    Parked Money in My MAXGain Account = 5,79000/-
    Money Disbursed to the Builder From A/c = 12,91574/-
    4 EMIs Paid = 23,947.00 *4 = = 95,788/-
    Total Interest Component = 5,998/-

    My question is, why did Drawing Power came down to 24,79,529.00 from 2490000/-. I have not done any pre-payment. Property is under construction and First EMI went on 5th September 2013.
    Sanction Dates: 6,45,787.00 on 8th Aug 2013 and 6,45,787.00 on 9 Dec 2013.
    Regards,
    ssingh

    1. ashalanshu says:

      Dear Ssingh, the drawing power is reducing because you are repaying your basic loan through your EMIs.

      thanks

      Ashal

      1. ssingh says:

        Thanks Ansal,
        If drawing power is reducing due to principle payment through EMI then it should have got reduced by ( 95,788 – 5,998 )= Rs 89,790 and not just ~10K.
        Please help to understand this.

        Regards,
        ssingh

      2. ssingh says:

        Dear Ansal,
        If principal payment through EMI is reducing my Drawing Power then it should have got reduced by ( EMI Paid- InteresetComponentInEMI) = 95,788-5,998 = 89,790 and not just ~10K.
        Please help to understand this.

        Regards,
        ssingh

        1. ashalanshu says:

          Dear Ssingh, not the full money is adjusted towards principal. the reason is you are paying the EMI for full loan disbursal but in actual your loan is disbursed partially. Hence, the loan repayment in terms of principal from your regular EMI is adjusted as per your loan amortization schedule and not as per your basic thinking. The balance amount is available to you as available balance.

          thanks

          Ashal

          1. ssingh says:

            Thanks Ashal,
            Now statement is completely clear to me.

            Regards,
            ssingh

  178. Surojit says:

    hi Manish- read your post in jagoinvestor.com on SBI MaxGain. I recently got my loan sanctioned from SBI – but some officer there told me that the withdrawal facility from MG has been revoked. Can you pls gv some idea on that

    1. ashalanshu says:

      Dear Surojit, being an overdraft account, SBI can not revoke the withdrawal facility. There is some communication gap between you and that officer.

      thanks

      Ashal

      1. ARIJIT SEN says:

        May be the offr is referring to the period while the loan is still under disbursal. When the withdrwal is not not allowed.

  179. Arijit says:

    I have a SBI Max gain loan account which is under construction linked disbursement stage. I had opted for full EMI since the first installment without any pre-EMI. Hence during the initial phase of the loan the amortisation towards Principal repayment is quite heavy. By the time the full disbursal of 30 Lacs occurs I would have repayed around 5 Lacs. Will this bring down the scheduled loan repayment period of 20 years.

    Second Is there any IT issue for the interest generated for funds parked in this OD loan account.

    1. ashalanshu says:

      Dear Arijit, what is your drawing power here?

      thanks

      Ashal

  180. Rajit says:

    Hi,

    I have take a loan with SBI for 30 lacs and it’s an OD maxgain account. Till date I have repaid 3 lacs and out of total tenure of 20 years, three years have already passed.

    Since my available balance shows as 3 lakhs, I believe I can withdraw 3 lacs for my personal use. But this will make my overall loan outstanding back to 30 lacs. My question is how will bank adjust 30 lacs from my account in the remaining 17 years? Will there be any increase in the EMI or my loan tenure? I understand the system is robust to calculate automatically but am slightly confused here on how will they take back the amount that I have withdrawn?

    1. Rajit says:

      Ashal has replied to my query and clarified my concerns in the other forum. Thanks

    2. Yes, the EMI will increase or the tenure will get increased ! .. It will happen automatically using EMI formula !

  181. rohini patil says:

    From two three months my home loan related increasing from 10.2 to 10.3 to 10.5

    ho it is impacting me. can you explain.

  182. sikinder says:

    Hello Sir,

    I have a query regarding my maxgain account. I had taken a home loan ( term loan )of 1500000(15 Lakhs) from SBI in 2009 and I pay EMI of 14,965. In the month of May 2013, I converted the term loan in to maxgain to make use of overdraft facility. On October 4 2013, I deposited Rs 4000 to my maxgain account. When I checked my account online on October 22 2013, my account showed following details .
    Book Balance -14,01,844,00
    Available Balance 3,382.00
    Limit 14,05,226.00
    Drawing Power 14,05,226.00.
    Rate of Interest 10.05%
    My question is I had deposited 4000 in my account instead of 4000, available balance showed only 3382. (I have not withdrawn any amount)
    On November 19 2013 these are the details.
    Book Balance -13,98,906,00
    Available Balance 3,334.00
    Limit 14,02,240.00
    Drawing Power 14,02,240.00
    Rate of Interest 10.25%
    Every month money is getting deducted from my available balance. Can you please clarify why my money is getting deducted.

    Thanks,
    Sikinder

  183. Senthil says:

    Dear Sir,

    My latest SBI loan installment disbursement transaction is shown as “DEBIT HTL TR”.

    What does this mean?, Usually it used to be displayed as “TO TRANSFER
    NEFT SBINXXXXXXXXXXXX ‘Builder Name'”

    Regards
    Senthil

    1. ashalanshu says:

      Dear Senthil, relax. As long as money has received by the builder, you should not be worried about the wordings in your account statement.

      Thanks

      Ashal

    2. Not sure on that myself . better ask on our forum – http://www.jagoinvestor.com/forum

  184. Vivek R deshpande says:

    the excel Spread sheet published by SBI website, indicates a reduction in tenure, with referance to he deposit of surplus money in Maxgain account, offcourse without withdrawl. however you say, there is not reduction in tenure, pl explain…

    1. ashalanshu says:

      Dear Vivek, can you share the website link?

      thanks

      Ashal

  185. ruchin says:

    I have taken home loan ( sbi max gain ) its almost two month but EMI has not been dedcut from my saving account , please let us know what should i do .

    Regards
    Ruchin

    1. Ruchin

      Whats SBI explanation on this ?

    2. ashalanshu says:

      Dear Ruchin, in all probability your ECS mandate has not been recorded with your salary account bank. Please contact your loan serving branch to know the exact status of ECS mandate.

      Thanks

      Ashal

  186. leo says:

    SBI has now increased base rate to 10% ,when i login to my max gain account it shows Rate of interest for my home loan as 10.4% but i dont see anything indicating if there is change in my EMI or have they increased tenure ? where can i find these details Online? or do i need to visit the Home Branch ?

    1. generally its changed each 3 months . So when your EMI will be cut , you will get to know about it then !

      Manish

      1. Leo says:

        EMI is unchanged as it got deducted on the 10th ,but how do i check if thy have not increased my tenure?

        what’s first point of contact for any issues concerning Maxgain home loan? Online i dont find much info ..

        call centre for SBI ? do they help ?

        awaiting ur response .

        1. Hmm .. I am not sure at that level . You must be assigned some branch for all the queries, right ? Why dont you visit them once and get this clarified. The best part with you is that you have it in SBI , where you can file RTI 🙂

    2. ashalanshu says:

      Dear Leo, your loan term has been increased a bit as EMI is kept same. You can confirm the same with your loan serving branch.

      Thanks

      Ashal

      1. leo says:

        Hi Ashal

        i checked with my home branch & to my surprise EMI & tenure both are unchanged !!

        its only interest rate which has now increased to 10.4 % .

        So does this mean larger chunk moves into interest portion ? but would this be helpful if i am looking to close my loan earlier than said tenure of 20 yrs.

        1. ashalanshu says:

          Dear Leo, as term has not been changed and EMI is also same. It means less principal repayment ‘ll be there as interest ‘ll be higher due to increase in rate of interest. But over the period, the ROI ‘ll come down and at that time you ‘ll pay higher principal amount.

          Thanks

          Ashal

  187. sudin says:

    Can i get the answer on it

  188. sudin says:

    Is it possible to put Tax saving FD in OD account to get benefits on interest as well as tax saving

    1. I am not sure on this . Please open a thread on our forum to discuss this – http://www.jagoinvestor.com/forum

    2. ashalanshu says:

      Dear Sudin, you can not put money from your Tax saving FD into your Max Gain OD account. The reason is simple, liquidation or collateral or loan on Tax Saver FD is not allowed.

      Thanks

      Ashal

  189. laxy says:

    Hi Achal
    thanx for the excellent article.

    I have taken this max gain loan from SBI, final installment may get release by this wknd. my query is that 1.when i login netbanking it shows 2 a/cs one is savings another is OD. can I issue cheque from savings a/c?. will extra amount in savings a/c help in reducing interest?/ i have to transfer that extra amount to OD a/c which is not accessible in emergency until final installment get released?
    2. can i increase emi any time by giving request letter to racpc? is there any extra charge?
    3. as per my understanding if i transfer amount from savings a/c to OD a/c it will increase the available balance in statement and reduce book balance

    Regards

    LAXY

    1. ashalanshu says:

      Dear Laxy, to keep interest burden lower, you need to park your amount in OD acct. Yes, till final disbursal is not made, you can not redeem your own amount. As of now if money is in your Sb account, it’s not helping you to save interest outgo but it’s available for withdrawal for you and you can write cheque for the same.

      Yes, you can increase your EMI amount any time by applying in written to your loan serving branch.

      Yes, available balance ‘ll increase and bok balance ‘ll come down. Reduced book balance means less amount used bny you as loan and thus less interest on you.

      thanks

      Ashal

  190. Vamsi Krishna Pendela says:

    This is an excellent article. It’s good to see that someone has posted on this ambiguous subject in very minute and detailed FAQs so easily.
    I have the same understanding of what was explained and informed one of my colleague on the SBI MG account now and found this link.
    I forwarded this link to him and am going to publish this link to all our colleagues.
    Thanks once again for posting this article.

    Regards,
    Vamsi.

    1. ashalanshu says:

      Dear Vamsi, thanks for the praising words.

      thanks

      Ashal

    2. Welcome Vamsi

      We will be glad if you can spread this !

  191. RUCHIN says:

    Hi ,

    SbI just approved my loan ( sbi Max gain ) . They opened my Od account also .
    but there is one more Loan account showing online in my account .Can you please tell me the difference or also let me know how can i pay my EMI

    Regards
    Ruchin

    1. ashalanshu says:

      Dear ruchin, the account you are referring to is meant for your RIN Raksha policy prem. account. You need to park your money in OD account for normal home loan related interest saving. to save interest outgo towards life insurance prem. it’s advisable to park matching amount in your Rin Raksha account named as SBI Surakshit.

      Thanks

      Ashal

      1. ruchin says:

        Dear Sir,

        Can you please explain me in details and what about EMI should i trf the amount in my od account .

        Regards
        ruchin

        1. ashalanshu says:

          Dear Ruchin, what details you are asking for? In case you want to keep it personal, please mail me on my personal mail id.

          thanks

          Ashal

    2. I am not clear about your question !

  192. Rahul says:

    I am aware of the higher rate…. But in this case the cost of borrowing for the bank and the cost of lending becomes the same. Typically there should be a spread between the two. I just want to find out that is there a catch here….? Do these banks recover the spread by levying any kind of charges instead of interest?

    1. ashalanshu says:

      Dear Rahul, how come the borrowing cost and lending cost for a Bank is same. The base rate of the bank is it’s over all borrowing cost and it’s lending above that. There are no hidden charges. Yes usual EMI/cheque bounce and penal interest charges ‘ll be there if it happens.

      Thanks

      Ashal

      1. Rahul says:

        I am talking in case of an individual who goes for Maxgain. He borrows say at 10.5%. If he gets surplus he will park it in his Maxgain account again @ 10.5%. This means that the cost of lending and borrowing for the bank is the same i.e. 10.5% for that particular client. The bank will no make any money in this case. This sounds a little bit odd to me.

        1. ashalanshu says:

          Dear Rahul, in case of Max Gain, think it differently. You have repaid the loan (for sake of interest calculation) so bank is not charging you interest. bank is not at all paying you 10.5% on parked amount. I think you are confusing yourself with the ‘saved interest’ as ‘paid interest’.

          Thanks

          Ashal

  193. Rahul says:

    There is a similar scheme called home saver from standard chartered. Also Citibank and HSBC provide similar types of loans under different names. I have heard that these banks charge some charges in lieu of interest every year. Is this info correct?

    1. ashalanshu says:

      Dear Rahul, the banks mentioned by you charge higher Rate of Interest for Max Gain like Product.

      Thanks

      Ashal

  194. leo says:

    Hello Ashal

    I have recently moved my loan to Max gain & after logging into their website i dont see my EMI amount listed anywhere ? recently SBI has hiked % rate for loan above 30 lac to 10.2 % which is mentioned but nothing on EMI ? So does EMI change and where can i see it ?
    also does SBI have home loan customer care number ? called one of the number listed on their website & no mention on loan on the IVR .

    1. ashalanshu says:

      Dear Leo, your EMi is not credited or you want to see just your EMI amount? Due to ROI increase, as of now, SBI ‘ll not increase your EMI but ‘ll increase your loan term. Later on if ROI goes very high, it may increase your EMI also.

      thanks

      Ashal

  195. apps says:

    HELP ME PLEASE:
    on 30 Sep, a big amount was deducted from my available balance as DEBIT INTEREST. This amount is approx 90 of my EMI.EMI is paid on every 26th of a month.
    Will this amount (approx) available again in available balance after next emi is paid on 26 Oct.

    1. ashalanshu says:

      Dear Apps, what’s the problem? As your Max Gain home loan is an Over Draft loan, the interest ‘ll be debited only on last day of the month. So I think you are worrying for this interest debit entry. Relax. it’s normal.

      Thanks

      Ashal

  196. Manish says:

    Hi Ashal,

    Thanks a lot for such a detailed article, reading all of this and QnAs I definitely feel much more knowledgeable and informed. A quick question which got answered partially in other questions however just posting to get final assurance.
    I have got 47 lakhs as sanctioned amnt in Feb 2013. Property is under construction and possesion wud be in 2015.
    Current status is
    Book Balance 11 lakhs
    Available balance 36 lakhs
    Limit 47 lakhs
    Drawing Power 47 lakhs

    Currently I am paying pre emi and have a moratorium period of 24 months.

    Assuming after moratorium period my Book Balance becomes 37 lakhs and available balance 10 lakhs. At this time my full emi would start, will I be able to have transaction right at this point and would i be able to withdraw 10 lakhs from OD account.
    I assume once full emi starts my limit and drawing power would start reducing as per principal part of my emi.

    1. ashalanshu says:

      Dear Manish, due to EMi start post Moratorium period, your principal ‘ll reduce and thus your loan (drawing power) ‘ll come down but you can not transaction rights till final disbursal.

      Thanks

      Ashal

  197. Ankit says:

    1 more question –

    When i transfer my surplus to loan account through NEFT/IMPS/RTGS, will i get an option asking whether i want to transfer that amount for prepayment or for MG ?

    1. ashalanshu says:

      Deatr Ankit, the amount ‘ll come into your Max Gain account by default as surplus amount parking anf ‘ll help automatically to cut back your interest outgo.

      thanks

      Ashal

  198. Ankit says:

    Suppose i park surplus liquidity every month in my MG A/C and won’t withdraw it. You mentioned that EMI will remain same but interest component will go down…..that means principal component (in EMI) will increase (or the outstanding principal will come down). So doesn’t that mean that my loan tenure will come down since effectively i will be able to pay off the entire amount before loan tenure ?
    Also please let me know how can i transfer my surplus amount in MG A/C towards loan prepayment ? Shall i have to write a letter to bank everytime i does so ?
    I am confused regarding the below situation –
    Suppose i have taken a loan of 30 lacs for 25 years. My EMI is 28,000. But i generate a surplus of about 7,000 every month after paying my EMI. I have sufficient liquidity and i want to use that surplus 7,000 to prepay my loan amount. So will it be advisable to park that amount in MG or use that to prepay loan? If i want to park that amount in MG A/C i can transfer by net banking; but how to use transfer that amount for prepayment ? Please help.

    1. ashalanshu says:

      Dear Ankit, please read the aticle again. I have clearly mentioned that loan term or EMI ‘l not change. any saved interest due to parked surplus amount ‘ll be added up into your already available surplus amount and thus it ‘ll help to bring down interest outgo min next month and months after months like that.

      Why do you want to close your loan, if interest outgo is already coming down due to your parked surplus amount? For an imaginary situation, if you have taken 30L Rs. loan @ 0% ROI, do you still prefer to close it now or ‘ll run it till it’s original term?

      Thanks

      Ashal

  199. Sheetal says:

    The above question reagrding the interset is a followup for the below question:

    For an imaginary situation, my loan amount is 30L Rs. & parked surplus amount is also 30L Rs. Does it mean, my loan is closed & I can claim my property papers from SBI?

    1. ashalanshu says:

      Dear Sheetal, no your loan is not officially closed. You w’d have to inform your loan serving branch that you wish to close your loan and they ‘ll do needful. Only after official closure of yoiur loan, you can claim your property papers.

      Thanks

      Ashal

  200. Sheetal says:

    Would SBI offer any interest on the amount parked in OD account? If yes, what would be the rate of interest?

    Thanks,
    Sheetal.

    1. ashalanshu says:

      Dear Sheetal, SBI do not offer any interest on your parked amount in OD. You save your own interest outgo only.

      thanks

      Ashal

  201. Prasad says:

    in case 2 will the amount saved in interest be credited to OD account? 😮 … I am little confused on it…..please explain. Thanks.

    1. ashalanshu says:

      Dear Prasad, the amount is already there in your OD account. Remember you Paid EMI. the principal part was adjusted immediately towards basi home loan amount. The interest part remains as it is till last day of the month and whatever calculated interest is to be debited, it ‘ll be debited and any remaining interest ‘ll be available as aditional surplus to you.

      thanks

      Ashal

  202. Sonata Joshi says:

    Dear Sir,

    I got Pre Approved Home loan for SBI of 28 lacs,I want to purchase an underconstruction property having basic price of 35 lacs, builder is only ready to give property papers of 28 lacs. SO according to that My Home loan that can be sanctiones 22.4 lacs only. So will SBI give me loan of 22.4 lacs only or it will give me loan considering the market rate of that property???

    1. They will consider the AGREEMENT VALUE + STAMP DUTY + REG CHARGES

  203. Sudip Pal says:

    I am an existing home loan customer, paying interest @10.01%. I recently reduced the interest% by paying processing fee to bring to the level the new home loan customers are being charged interest. When I came to know about the MaxGain product and the benefit that it offered, I wanted to check the possibility of switching over to MaxGain from the current loan paying terms/conditions with the loan serving branch and the branch informed me that the conversion is not allowed.
    1. Can anyone confirm on the same ? If I am allowed to reduce my interest rate to the current rate offered to the new clients, why the same would not be allowed for MaxGain ?
    2. What is the other option to switch to MaxGain, do I need to take my loan out to some other bank and then come back to SBI for a MaxGain loan, with the remaining loan balance ?
    3. My current o/s is 19.65L and I suppose this should not attract any additional interest rate with MaxGain and processing charge, if I go as a new client to the bank.
    Please advise.

    1. ashalanshu says:

      Dear Sudip, if some internal policy has been changed, I can not comment. As far as I know, once in a life time of your loan, chanfge over from normal to Max Gain is allowed by SBI. Please contact your RACPC for more details.

      thanks

      Ashal

  204. Ankur says:

    Another question –

    You have mentioned that “Having property insurance as well as sufficient life insurance is compulsory”
    I already have a term insurance with me for an amount which is greater than the amount I want to apply for loan. Do I need a property insurance as well?

    1. ashalanshu says:

      Dear Ankur, L:ife Insurance & Property insurance are for different purposes. In case you are already having sufficient life insurance, you can deny the fresh life cover to be purchased with loan but property insurance is to cover the risk for your property from natural calamities like Earth Quake, Lightening, Flooding…..
      So property insurance is also neccessary.

      Thanks

      Ashal

      1. Property Insurance is compulsory only with some loan providers , not all . HDFC didnt put any restriction to me 🙂

        1. Dear Manish, what I mean was – good to have. I did not mean compulsory. 🙂

          thanks

          Ashal

  205. Ankur says:

    Hi Ashal,

    Your patience in answering questions is commendable!

    If let’s say I got a loan sanctioned for 60L but later I realize that I just need 50L as loan amount.

    1) How do they calculate EMI in such a case?
    2) Do I need to tell them in written that I don’t need the extra money or is it self-implied?

    Thanks!

    1. ashalanshu says:

      Dear Ankur, for the given case, if youwant to use only 50L Rs. our of the sanctioned limit of 60L Rs. You need to inform in written to your loan serving Branch. You w’d be given the option to continue with the OLD EMI as per 60L Rs. loan or new EMI as per 50L Rs. loan amount.

      thanks

      Ashal

  206. Dear Ashish, the info provided to you by SBI person is wrong. SBI do not provide any interest to you. As you are not earning any interest question of taxation of this interest does not arise.
    Yes there is no limit & you can park full 30L Rs. on day one.
    thanks

    Ashal

  207. Ashish says:

    Hi, I have few questions on MaxGain.
    As per my understanding, if I take a loan of 30L and keep 2L in MaxGain from day 1, then interest will be charged only for 28L. I was told by SBI that we also get an interest (equal to loan interest ie 10%) on the money parked in MaxGain (2L).

    1. In this case, by the end of the loan tenure (which’ll reduce by 2 yrs due to parked amount 2L from day 1), will get a maturity amount of around 7L? ie 10% on 2L for 13 yrs.
    2. Is this amount (interest on money parked in MaxGain) taxable?
    3. Any limit on the amount that can be parked in MaxGain? Can I take loan of 30L and keep 30L in MaxGain form day 1?

  208. Mahesh says:

    Dear Ashal,
    i am having two home loans one with SBI Rs. 10 lacs at 9.55% and a MG account and another 25 lacs with HDFC at 10.65% with recent change in interest rates.

    i think rather keeping more money in MG account it will be better to prepay the higher interest rate loan. though we can keep atleast 3 months expenses in MG account.

    Also i have another question can i link my HDFC ECS from MG account or can i give standing instruction to all credit cards, insurance companies from MG account

    need your advice on the same.
    rgds
    Mahesh Gaur

    1. Dear Mahesh, Yes repaying a higher interest rate loan is beneficial. You can provide ECS from your MG account to other payments but make sure that on the date of debit, there is enough available balance to pay out that ECS.

      thanks

      Ashal

  209. SARVESH says:

    hi

    Can you please clarify is there any condition that there should not be more than 2 properties for being eligible for Max Gain.

    In other words if you are asking loan for your 3rd property, is this facility available

    As per my knowledge this facility is restricted to 2 properties only

    Thanks

    1. Dear Sarvesh, yes, Max Gain is not available for more than 2 properties.

      thanks

      Ashal

  210. Rohini Mehra says:

    Hello, Thanks for the wonderful article and explaination.
    One think that is still not clear is about the following situation
    I took loan of 30L in 2010 for a duration of 15 years under MG scheme.
    Now till 2013, I am earning good 🙂 and paying surplus amount along with EMI every month. This way the available balance in my account is 30L (which equals to the loan amount I have to pay) Now the bank still expects me to Pay EMI.
    What will happen with this EMI as the interest component in this EMI is Zero and my principal is already at 30L.
    So is the bank going to pay me interest @ Home Loan Interest Rate on the surplus amount (EMI) I am paying to the bank?
    If so then it sounds like a good idea to keep the account open and earn more interest than Saving or FD.
    If not, I think it will be a good idea to close the account and live liability free.

    Can you please comment?

    1. Ashal will come to your rescue soon !

    2. Dear Rohini, for the given situation, all the interest part of your EMI is now available to you for withdraw on the date of EMI credit into your Max Gain account. SBI ‘ll not pay you any interest on saved interest from EMI amount.

      To understand it better, please re-read the initial part of the article where the difference of Over Draft account is told over Saving Bank account. In Over Draft account, either you pay the interest to your bank or do no pay if Over Draft limit utilization is zero (30L Rs. loan amount in your case parked by you from your own surplus). Bank ‘ll not pay any interest to you in your Over Draft account.

      So the end point is – please do not park or leave money in your Max Gain (Over Draft) account which is more than the Drawing Power.

      Thanks

      Ashal

      1. Rohini Mehra says:

        Wao, thanks dear Ashal
        That was awesome and so nice of you to explain it to me and made it crystal clear.
        I now understand what I am supposed to do with my account.
        Thanks again!

  211. Saroj says:

    You have mentioned that one should demand the amortization schedule to understand the change in the interest outgo. However when i requested for the same to my home branch, they replied saying that amortization schedules cannot be drawn on MG accounts. Is this true? Who should be able to help me out?

    1. It might be because your loan tenure can be up and down depending on your activity .

    2. Dear Saroj, on the basis of your running loan interest rate & remaining term, a general loan amort. schedule can be arranged from your loan serving branch. If your branch is not helping you out, you can prepare your own schedule in Loan Amort. Template of exl. in your own PC/laptop.

      Thanks

      Ashal

  212. Abhijeet says:

    Qsn: If I’m parking some money on monthly basis or in lump sum, will my loan term come down or EMI go down?

    Your Answer: No. Neither your EMI ‘ll come down nor your loan term.

    If I Pay additional EMI every month and never withdraws that surplus, is that will reduce my tenure automatically.

    1. Dear Abhijeet, the loan term ‘ll not change. The only thing ‘ll change – your actual interest outgo. Which you can notice on last day of each month.

      thanks

      Ashal

  213. Leo says:

    Hello

    Article was very informative ..Thanks !!

    currently i am transferring my home loan from IDBI to SBI max gain ,and loan is also sanctioned .I visited the RACPC office bangalore & documentation part but one thing which they are insisting on is property insurance ..They passed me onto one more person in same office who have me onetime premium of 29K to be paid before disbursement ..Is this mandatory to do with SBI ? Valuation of property has come to 60 lac & they have taken 80% of that to calculate the Onetime premium .Is this good option or should i take insurance from outside ? if i don’t opt from SBI will there be problem in disbursement ?

    1. If its property insurance, it might be required . But it should not be compulsory to take from the same organisation .

  214. Rajesh Patel says:

    Can any one share the link for excel calculator for the max gain account?
    I read that a few calculators on the web have some errors.
    Which calculator is the final error free one ?
    Thanks a lot.

    1. Dear Rajesh, please visit my personal blog (http://asanideasforwealth.wordpress.com/2013/04/14/sbi-max-gain-some-faqs/) The same SBI Max Gain article is available there & in the comment section, one reader has shared a Google Doc SBI Max Gain calculator prepared by him.

      Thanks

      Ashal

  215. Rajesh Patel says:

    Assume I avail Max Gain Home Loan for Rs.10.00 lacs
    I park Rs.10.00 lacs in the Max Gain Account after a month.
    Should SBI have a problem with it?
    Are there any charges for depositing the entire loan amount in the Max Gain A/c?
    Where can I get the schedule of charges for the Max Gain A/c?

    1. Dear Rajesh, Max Gain account is an Over Draft Account, so no reason to worry. Even you can park the surplus amount on the very day of withdrawal to builder towards home loan. No extra charges or penalties for this by SBI.

      thanks

      Ashal

  216. Srikanta S says:

    Sir i have taken 15lakh Home loan from SBI. The EMI for 20 years term is 16073 at 9.95%. My question is that what is the percentage of Principle amount is included in this 1st EMI.

    1. Its done like this . you have to calculate 9.95% of 15 lacs , that will give you 1 yr interest . Then divide it by 12 , to get monthly interest . That number will be your FIRST MONTH interest. Now EMI – This amount will be your principle . Do the math and come back to us if you dont understand .

  217. Anirudha says:

    Hi,

    Thanks for the wonderful blog. It had cleared lot of doubts and questions.
    I have also have one question regarding interest rate.
    I have sbi max gain loan account. My current interest rate is 10.7%. My total loan amount is 24 lakhs. I visited my branch last saturday and asked them if they can lower my interest rate. They said that it can be done but i need to pay 0.56% of total outstanding to them as charges and after that my interest rate will be made 9.95% (i.e. 0.75% less than 10.7%).

    Here is my account snapshot:-

    Book Balance -21,62,220.00
    Available Balance 1,69,053.00
    Limit 23,31,273.00
    Uncleared balance 0.00
    Drawing Power 23,31,273.00
    Currency INR
    Rate of Interest (% p.a.) 10.7%

    So as per SBI, i need to pay them 12108/- to make interest rate 9.95%.
    My question is it worth doing it? Will it save money for me? Right now i pay total emi of around 24k and from that around 19k is interest (this is what i see on my netbanking under “DEBIT INTEREST).

    Thanks and Regards,
    Anirudha

    1. Dear Anirudha, yes it’s a worth of your money to opt for lower spread over base rate. Please keep the same EMI, so that loan is closed early.

      Thanks

      Ashal

      1. Anirudha says:

        Thanks a lot Ashal!!

    2. ANirudha

      Please open a thread on our forum for this to discuss in detail – http://www.jagoinvestor.com/forum/

      1. Anirudha says:

        hi manish,

        I have posted this question on forum. Here is the link:

        https://www.jagoinvestor.com/forum/reducing-interest-rate-on-sbi-max-gain-loan/9002/

        Please provide your suggestions.

        Thanks,
        Anirudha

  218. Sathish says:

    Hi,
    I have SBI MG account, in which i want to know how the principal amount is reduced based on the amount parked in my OD account.

    Ex:
    if my loan Amount is 29 lakhs and my EMI is around 28000/-
    if i park 29 lakhs in my OD account.
    How much the principal amount will be reduced?

    Thanks,
    Sathish

    1. Dear Sathis, to understand it, please demand a loan amortization schedule from your bank branch. The part of your EMI which ‘ll be adjusted towards basic loan each month ‘ll be there in yor loan amort. sch. The interest part of your EMI ‘ll be available to you as surplus as the interest outgo for your given case is zero.

      thanks

      Ashal

  219. Gayathri Iyer says:

    Hi.. Very nice article.. Given the low acceptance levels as these products ‘sound complicated’…hope this article helps poularise this product.. as at the end of the day it provides the benefits similar to pre-paying the loan; and just that u still have the funds in hand..!

    Do hold HL OD account.. Would it be wise to break investments held outside (specifically shares / MFs – where we cannot ascertain what the returns could be) and keep the funds parked in the OD accounts..? Kind off in this dilemma – whether to liquidate the stocks to park the money in home saver account to save interest..?

    1. Dear Gayathri, please use your OD account as a substitute of your SB account or debt funds for parking short term money. Do not put it in competition against pure investments like MFs or FDs.

      Thanks

      Ashal

      1. Gayathri says:

        Thanks..!

  220. Dharmesh says:

    dear ashal

    your analysis is in-depth and interesting too. why not convert all the blogs into an excel sheet and show the MG customers what’s the best for them pls?

    dharmesh

    1. Dear Dharmesh, there are already many wrong exl. sheets available over internet & I do not want to create one more. 🙂

      The interest calculation here is on daily basis & accordingly the actual benefit ‘ll be different to each individual. Hope you ‘ll understand it. 🙂

      Thanks

      Ashal

  221. RAJIV MISHRA says:

    Hello,

    I have a query. SBI is calculating interest on daily basis, ie. compounding of interest is done daily in max gain. whereas for traditional plans its monthly compounding

    What’s the change in effective rate of interest because of change in frequency interval of compounding ??

    I calculated on internet on a website for a 25 lakh loan for 25 years, you need to pay about 4 lakhs extra interest if its compounding daily viz a viz monthly.

    Please if you could shed some light ?

    Thanks,
    Rajiv.

    1. Yea may be , it should be very much into your agreement with them in start .

  222. kiran says:

    Hi Ashal,

    I am running a maxgain HL account for an under construction property and hence the loan is partially disbursed. I have a query based on all the discussion threads above. As you have clarified, the benefit of Maxgain is the liquidity it provides – in terms of withdrawing the amounts as and when required in case of emergency. But what happens in case someone has not utilized the liquidity and has been parking excess amounts in the OD account ? At the end of the loan tenure you would have paid all the EMIs and the OD account will have an excess balance (interest outgo saved) – so finally will the bank pay out this money to you ? in which case the max gain account is actually paying out interest. Is my understanding correct ?

  223. PS says:

    Dear Ashal/Manish,

    Thanks for this article and the wonderful clarifications. I am running maxgain since Sep – 12 and I have one doubt. Shouldn’t my DP amount have decreased a bit by now. I just checked. The DP is same as my loan disbursed amount. Yes, the available balance is showing higher than what I’ve placed as deposits but can’t say if that it all due to surplus interest or if principal repayments have been added as well.

    Thanks in advance for your replies.

    1. Dear PS, please check with your koan serving branch. there seems a technical glitch in your loan account. the DP should come down if EMI’s are running normal & loan is fuly disbursed.

      Thanks

      Ashal

  224. Jatin Jain says:

    Hi Manish,
    First of all,, kudos to your hard work for explaining this in depth detail. Ideally, we the buyer should have gone this before taking the homeloan but reading this detaield explanation give us a good relief that the decision we made earlier getting SBI MaxGain was correct :)..
    I have one quick question regarding transferring Money from outside India directly to MaxGain. As the power of internet banking allows to do that, are you aware of any tax liabilities or process wise, whether I can transfer money say from my US bank account directly to Maxgain OD account.

    1. Dear Jatin, while transferring money from abroad to India. There is only one limitation, you can not repatriate this money back easily. As your Max Gain account is not an ordinary NRE or NRO account. rest is same as you are transferring to any bank account in India. For taxation the rules ‘ll remain same as applicable for normal remittancce to Indian bank accounts.

      thanks

      Ashal

  225. venkataram says:

    Hi ashal
    Good article, but it would be more clear by saying
    1. You will get interest on the parked amount on daily basis @homeloan ROI.
    (Its like you are making an FD for short terms@@homeloan ROI. Actual FDs ROI is very less when you compare this with homeloan ROI for short terms)
    2. No change will be there wrt your loan account.
    am I right?

    1. Dear Venkat, you can use that wording but it can be misleading in a sense that no compunding is happening there in terms of interest earning.

      Regarding loan amount, you are absolutely right.

      thanks

      Ashal

      1. apps says:

        I thinks compounding is happen coz saved interest is added to parked money. If initial parsed money was 2L, next month will be 2.x lakhs where x is the interest saved on 1st month. Now in second month, interest would be calculated on (Outstanding-2.x)Lakh and interest saved would be on 2.x Lakh,

  226. Prajay says:

    Hi Ashal,

    I need some help in understanding.

    I have taken a 30L Loan under SBI SURAKSHIT HL MAXGAIN AUG 11 for a Property which is under construction. The loan was disbursed in stages.(Till date 28 L has be given from 6 Installments)

    I opted for paying full EMI from Day one (34+ Thousand per month since March 12). In My statement of Account I get the total loan amount given till date, Interset and the amount I have paid till date.

    My understanding is that the part of the EMI would be going towards the Prinicpal amout, part towards the Interset and remaining excess amount (Since Loan was given in installments and I am paying the full EMI from the first Month) wouId go to the Max Gain Account.

    1) Please let me know if my understanding is correct
    2) Where/Which Document (other the Statement of Account) from Bank would give the details of the amount in each of the 3 Categories (Prinicpal, Interest, Amount in my Max Gain Account)?

    Please help

    Jayanth

    1. Dear Jayanth, please check your Drawing Power, Available balance & book balance to know the things you are asking for.

      Thanks

      Ashal

  227. Shankar says:

    dear Ashal,

    Thank you for the detailed explanation, many of my doubts are now cleared.

    Can I make prepayment after some years from the OD account, if i dont need the liquidity??

    As per your example
    “Let’s assume a test case of loan amount 30L Rs. @ 10% Rate of Interest for 20Y term. The normal EMI for these nos. ‘ll be 28951 Rs. The break up of your EMI for first month ‘ll be 25000 Rs. interest & 3951 Rs. for principal repayment.
    Now if you do have 2L Rs. surplus in the very first month”

    Assuming the surplus 2 lacs and all the interest saved to OD is not withdrawn from OD a/c until it equals the outstanding balance, Interest saved will be around Rs1,76,000.

    But if I prepay 2 lacs in the 1st month, total interest saved will be Rs10,19,200.

    Also with HSBC method, interest saved should be Rs6,70,700.

    Is the above calculation correct?

    I tried it using your explanation and answers to various queries.

    Please reply, i just want to know if i’m getting it right, as i’m planning to avail a home loan in near future.

    -Shankar

  228. Shankar says:

    dear Ashal,
    As per your example
    “Let’s assume a test case of loan amount 30L Rs. @ 10% Rate of Interest for 20Y term. The normal EMI for these nos. ‘ll be 28951 Rs. The break up of your EMI for first month ‘ll be 25000 Rs. interest & 3951 Rs. for principal repayment.
    Now if you do have 2L Rs. surplus in the very first month”

    Assuming the surplus 2 lacs and all the interest saved to OD is not withdrawn from OD a/c until it equals the outstanding balance, Interest saved will be around Rs1,76,000.

    But if I prepay 2 lacs in the 1st month, total interest saved will be Rs10,19,200.

  229. Parida says:

    Some provided a link to a similar product from HSBC, link below. Note it clearly says that “…you can reduce the quantum of interest paid and thereby reduce the tenure of your loan…”

    http://www.hsbc.co.in/1/2/personal/loans/smart-home

    1. Dear Parida, please read my prev. reply to you above.

      thanks

      Ashal

      1. sunil tamras says:

        ashal n manish,
        1 doubt about maxgain.
        i have a maxgain home loan a/c running for a property.
        my loan was 35 lacs and hv reduced the book balance to 8.5 lacs by doing lumpsum payments..
        now i hv decided to buy one more property. my drawing power is 31 lacs till now.
        kindly tell me if i can use this 31 lacs for downpayment of the new property??
        do i need to inform the bank about using this money for another property.
        thanks
        sunil

        1. Dear Sumil, please confirm you are telling here drawing power or available balance. FYI – You can only withdraw the available balance. To withdraw it, no need to inform SBI” as it’s your money. The impact on you ‘ll be in terms of higher interest outgo in your Max Gain home loan as book balance ‘ll reach back to higher position.

          Thanks

          Ashal

    2. That happens with all home loans !

  230. Parida says:

    Dear Ashal,

    I’m afraid there is a fundamental mistake in the example provided, and this seems to be causing a lot of confusion. In your example where there is 2L in the OD account, this does not change the EMI (that’s correct) but rather saves on the Interest (by 1667 in your example) which is added to the surplus in the OD account, that in turn will reduce the interest component in the next month, and so on. If you think about it (or better yet put the numbers in an amortization calculator) you will see that this does in fact reduce the loan term, quite substantially. Another way to think about it is Total Payment = Total Principal + Total Interest = EMI*number of months. Principal remains the same, but the interest is lower. Since EMI is fixed, the number of months HAS to come down.

    1. Dear Parida, I’m running Max Gain for myself as well as many of my friends are running it. the info provided by me is correct. Regarding the comparison with HSBC, please do note the difference is there in adjustment of saved interest. In Max Gain, it’s available as surplus whereas in HSBC it’s no more available as surplus but adjusted towards principal repayment.

      Thanks

      Ashal

  231. Rohidas says:

    Hi,

    I took maxgain home loan and done agreement on 30 may. Where can I see the account details or how can I get the account details.

    Thanks

    1. Dear Rohidas, if you are an existing customer of SBI, you can check the account in your existing netbanking. If you are not an existing customer, please ask the loan serving branch to provide you the netbanking access for your loan account.

      Thanks

      Ashal

  232. lpt1 says:

    Ashal, It seems you have understood it incorrectly. What it means is that the loan taken in the MaxGain EMI scheme will cost 0.25% more than what a 1cr simple home loan costs. Currently for plain home loan the SBI rates are here (https://www.sbi.co.in/user.htm?action=viewsection&id=0,16,393,394)
    Upto 30L – 9.95%
    Above 30L – 10.10%.
    This means that the MaxGain home loan (even if it is for 20L) will cost you 10.10 + 0.25 = 10.35% .

    If this does not convince you, think about this – Why would the bank give you additional liquidity at no extra cost. Nothing comes for free in banking. Especially liquidity.

    If that too does not convince you, I think we should get someone senior and knowledgeable at SBI to comment.

    1. Dear IPT1, I understood it correctly & just to ensure you, many of my friends are using Max Gain for less than 1Cr. figure & the ROI is same as normal home loan. i.e. 9.95% for up to 30L Rs. amount & 10.1% for upto 1Cr. amount.

      Please read carefully the wordings of the SBI site. It’s for loan size more than 1Cr.

      Thanks

      Ashal

      1. lpt1 says:

        “A premium of 0.25% over and above the applicable Home Loan interest rate for Home Loan > Rs.1 crore is payable.”

        This is the exact wording. It means that for a ANY loan taken under MaxGain, you have to pay a premium of 0.25% over what a 1cr home loan costs.
        Apologies for being adamant, but please call up someone senior in SBI and ask them. Its possible that your friends have not read the small print. Until then it seems that your article on MaxGain is not entirely correct. Many people might read it and end up paying a higher interest.

        Ask yourself, why would a bank give you something for free? Whats in it for them?

        Manish,
        Do you know someone senior enough in SBI who can clear up this confusion.

        1. lpt1 says:

          See post #9 on this website – http://www.r2iclubforums.com/forums/showthread.php/14677-Home-Loan-interest-calculation-%28SBI-MaxGain%29

          It is old but clearly says – ‘Met with the chief manager of a local SBI. According to him SBI maxgain is capped to 50L. It attracts an interest rate that is 0.5% more than the vanilla home term loan.’

          This roughly matches my previous calculation where I estimated for a 20L loan, you will 10.35 (i.e. 0.4% more than 9.95% loan).

          Upto 30L – 9.95%
          Above 30L – 10.10%.
          This means that the MaxGain home loan (even if it is for 20L) will cost you 10.10 + 0.25 = 10.35% .

          1. lpt1 says:

            If you search on the web, you will a fair number of articles and comments by people who contacted SBI which say that interest on SBI MaxGain is 0.5% higher than plain vanilla loan.

            1. Dear Ipt1, I had already mentioned that my friends are running loans at normal rate which is 9.95% & 10.1%. What else you want as proof?

              Thanks

              Ashal

            2. lpt1 says:

              So you are saying all those people who contacted SBI and were told the MaxGain costs 0.5% more (by the bank managers) were misinformed ?
              Isn’t there a chance that you too missed the small print?

              Apologies, I dont mean to be rude or adamant. But until I hear otherwise from an SBI employee or confirmation by Manish, I stand by my statement that the MaxGain loan will cost 0.5% more than a plain vanilla home loan.

            3. lpt1 says:

              So you are saying all the other posts on the web are misinformed ?

              Sorry, I dont mean to be rude or adamant. You have provided an informative post that people may find helpful. But I stand by my statement until I hear otherwise from SBI or maybe Manish can clear up the issue.

            4. Dear IPT1, please check the link you shared with me. The effective ROI is indeed 9.95% & 10.1%. Please read the wording there. Effective ROI are Base Rate + 0.25% & Base Rate + 0.4%. Here important point is base rate of SBI is 9.7%. So effective ROI are 9.95% & 10.1% which is already given in the link shared by you.

              Please check on your own.

              thanks

              Ashal

            5. lpt1 says:

              No.

              The page you refer to https://www.sbi.co.in/user.htm?action=viewsection&lang=0&id=0,16,393,394 indicates the plain vanilla home loan rate.

              MaxGain rates will be more than this, as many people on the internet have indicated. You can see other forums.

              I will not pursue this matter further. Folks can do the due diligence for themselves. My only recommendation to people reading this is that please check with the SBI manager clearly as to what is the difference between this plan and the plain home loan plan. Ask for it in writing.

              If they are indeed the same, then good for you.

            6. Saket says:

              Based on reading from JagoInvestor, I took the home loan via SBI(Max Gain) in Jan-2013 for an amount of 30 Lakhs and I can confirm that rate of interest is 9.95%.

              There is not need to check with any senior management at SBI, just visit any branch and find out.

            7. Thanks for sharing that !

            8. Mallikarjun says:

              Max gain interest rates for NRI’s is 10.40% . If you are not going with Max gain it’s 10.10% for NRI. As of 30 march 2015. I had opted for without Max gain.

  233. DeepakJain says:

    Hi,

    Adding to Tushar’s question here.

    Let us say i have taken a loan of 40 Lacs for 20 years. As per payment schedule of (10%) I have to pay 9264132 (Interest)5264132 + 4000000 (principal) in total. Now on the very next day of disbursement if i deposit 40 Lacs in my MG OD account, does that mean my account would be credited back with 5264132 which i can withdraw also ? or i m missing something here

    Please clarify

    1. Dear Deepak, please read the article again. SBI is not crediting any interest from it’s own pocket. It’s merely not deducting the interest put in by you through your regular EMIs. For the example given by you, if 40L Rs. is the loan & same is deposited back into your Max Gain account by you on the very next day, the calculated loan balance ‘ll be zero & hence when the EMI ‘ll be credited into your Max Gain account, the interest part of your EMI ‘ll not be adjusted against any interest liability as it’s nil.

      This ‘ll keep on happening months after months & that’s how in next 20Y, you ‘ll be able to see that 56L Rs. figure in your Max Gain account from the saved interest.

      Thanks

      Ashal

  234. Dear Ipt, I know this higher Interest rate but it’s only applicable for loans for more than 1Cr. majority of home loans are in less than 1Cr. category & here the ROI is same. Regarding the comparison with plain home loan, the basic benefit of lower interest payment is same in both case. the only difference lies in the liquidity. In case of Max Gain you do have liquidity which is not available to you in normal home loan after part prepayment.

    Thanks

    Ashal

  235. lpt says:

    Ashal,
    As with any bank product, the bank will only offer you a feature/service if it gets back more.
    In case of SBI Max gain the interest rate is higher. From the SBI website for MaxGain – “A premium of 0.25% over and above the applicable Home Loan interest rate for Home Loan > Rs.1 crore is payable.”
    Same is the case for the HSBC Smart Loan product – https://www.hsbc.co.in/1/2/personal/loans/hl-interest-rates

    Do the math in an Excel sheet with the IRR, PMT, IPMT functions and you will see that a simple home loan is a better choice.

  236. Sachin says:

    Thanks Ashal for wonderful Article
    I have been reading the MG forum for long time now however i have missed one clarification over these times
    I always thought that even though EMI remains same over period the principal portion will increase as you have saved some interest and that is directly deducted from principal so outstanding loan amount will reduce faster but that’s not the case
    Principal remains same and saved interest is deposited back to OD account
    quick Q:-
    Can I Increase my EMI and reduce the term?

    1. Dear Sachin, yes you can increase your EMI anytime. Please contact loan serving branch for the same.

      Thanks

      Ashal

      1. Himanshu Pant says:

        Can’t we increase the EMI on our own by doing NEFT transfer of a higher amount every month ?

        1. that would reduce the EMI , not increase it 🙂

        2. Dear, Himanshu, any amount paid by you in excess of routine EMI, ‘ll become part of your surplus balance & ‘ll help you save the interest. that’s it.

          Thanks

          Ashal

  237. Dear Reddy, please deposit the insurance prem. equal amount to your insurance account & any other surplus into Max Gain account.

    Thanks

    Ashal

  238. Tushar says:

    Hello,

    I have one query –
    Lets us imagine one more imaginary scenario –
    I have taken loan of 30 L for 120 months. As soon as full amount disbursed by bank I fill the OD account with 30L (Father’s retirement money :)), so I’ll end up paying per month only principle which is around 25000 and interest saved would be accumulated in the OD account.
    Now suppose if Home loan interest is 10 % then at the end of 10 years my OD account would have 30L + around 17.5 L (interest saved). So I can withdraw around 47.5 L after 10 years ??

    1. Dear Tushar, If you have parked the surplus amount equal to loan balance, you can withdraw the interest part of your EMI immediately. no need to wait till the end of your loan term.

      Thanks

      Ashal

      1. Tushar says:

        Thanks for the reply Ashal !!

        Will bank realy make profit by offering this product ?

  239. Reddy says:

    Hi Ashal,

    I have applied for SBI maxgain homeloan on 3rd march 2013 (25L Loan+61k insurance) for under construction house.
    House will be completed in October 2013.
    I got SMS regarding sanction on 29th March 2013.
    I got the mail from RACPC AGM on April 16th 2013. They fixed my appointment on 23rd April 2013.
    On that day all formalities have been completed. They disbursed 10L amount to the builder after 5 days.
    In between 16th april and 23rd april, SBI people
    created two accounts in my Savings account (Transaction account (i think this OD Account) + Loan account (I think for insurance)).
    My EMI will starts from 10th June 2013. I have few queries regarding my loan.
    Please clarify my doubts.

    1.When i check the statement, they debited 1,636 Rs as interest in OD account and 17 Rs in Loan account as shown below. Please clarify on this.
    How can i avoid these interest debits? shall i transfer some amount to avoid interest?

    Description SBI SURAKSHIT HL MAXGN AUG 12
    Name XXXXXXX
    Book Balance -10,01,636.00
    Available Balance 14,98,364.00
    Limit 25,00,000.00
    Uncleared balance 0.00
    Drawing Power 25,00,000.00
    Currency INR
    Rate of Interest (% p.a.) 9.95%
    Lien Amount 0.00

    30-Apr-2013 (30-Apr-2013) DEBIT INTEREST 1,636.00
    25-Apr-2013 (25-Apr-2013) TO TRANSFER NEFT SBINH13115612485 SLS DEVELOPERS TRANSFER TO 99506044303 10,00,000.00

    Account Number 00000032950153662
    Name XXXXXXXXXXX
    Description MAXGAIN SURAKSHA
    Limit 61,000.00
    Drawing Power 11,924.00
    Outstanding Amount 12,124.00
    Rate of Interest 9.95
    Currency INR
    C.Y.YTD Interest 17.0
    P.Y.YTD Interest 0.0
    30-Apr-2013 (30-Apr-2013) PART PERIOD INTER 17.00
    26-Apr-2013 (26-Apr-2013) DEBIT TRANSFER
    TRANSFER TO 30322777921 SBI LIFE INSURANCE CO 12,107.00

    Thanks

    Waiting for your replies.

  240. Ashish says:

    Very very useful and comprehensive article. Thank you.

    I have HSBC Smart Home which works pretty much like this, but has following added advantages:

    1. Internet banking is enabled from day one in both directions (in and out).
    2. Cash withdrawal from debit card still has 5 transactions in month free.
    3. No need to setup transfer from OD to SB for EMI. EMI is directly taken from OD surplus.

    1. Dear Ashish, thanks for the sharing.

      Thanks

      Ashal

    2. Dominic says:

      I too have HSBC smart home loan. One way it is better than MG. But my interest rate is too high.

      One major difference is, the interest on the surplus will not be credited in your account. But that will be reduced from the EMI and replaced with principle. This will reduce your overall term and total interest payment.

  241. AJ says:

    Thanks Ashal for such a thorough article on SBI Max gain.

    I have a question –

    Let’s take a hypothetical example that I am purchasing an under-construction property worth Rs 1Cr in resale (means not directly from the builder but from another person who have purchased it earlier from builder)

    Now that person has already paid 30% payment to the builder and he is asking Rs 10 Lakhs as premium. So I am required to pay (30+10=)Rs 40Lakh at this point.

    In a resale transaction, I am advised that even if I have the full money with me, I should take at-least some minimal amount of loan from a bank to be on the safe side since banks verify property papers etc diligently.

    Let’s say I just want to take a total loan of Rs 50 Lakh from bank but at this point though I don’t have any requirement but from the risk aversion point of view –

    1) Can I take just 1-2 Lakhs partial loan from them?
    2) And once the resale transaction is over, can I payback the whole amount of Rs 2Lakh to them OR maybe put it in my Maxgain account?
    3) How and at which point will the full EMI will start in such a case?

    Any other suggestion is most welcome!

    Thanks
    AJ

    1. Dear AJ, here are the answers for your queries.

      1) Can I take just 1-2 Lakhs partial loan from them?
      Yes.

      2) And once the resale transaction is over, can I payback the whole amount of Rs 2Lakh to them OR maybe put it in my Maxgain account?
      Yes.

      3) How and at which point will the full EMI will start in such a case?
      You can start full EMI from day one of your loan.

      Thanks

      Ashal

      1. AJ says:

        >>You can start full EMI from day one of your loan.
        Can you elaborate this a bit? Day One?
        If let’s say I am invested in an under-construction property and have applied for 50L loan but till now the amount disbursed is just 20L. Will the full EMI start from the day I get 20L or will it start from the day I get the full mount of 50L

        1. ashalanshu says:

          Dear AJ, you can start the EMI immediately after the first disbursal. In your case after 20L Rs.

          thanks

          Ashal

  242. Sangita says:

    Hi Ashal,
    Only because I had gone through ur articles on MG that I opted for SBI Home Loan and and that too MG scheme. It was hell to deal with SBI overall but at last got the loan reimbursed. My hubby was saying why did I insist on SBI during the whole time…and I ws thinking in my head – Ashal’s articles said so… Now he advocates SBI Maxgain to all his colleague and friends :):)

    I can’t thank you enough for helping out to clear the queries at this plateform.

    1. Dear Sangita, glad to know that both of you are reaping the rewards of your hard work now. 🙂

      We are merely trying our best to help people like you. At the end of the day, taking actions on the advices is your responsibility & you are prime example of what can be achieved by Acting on the discussions.

      Thanks

      Ashal

      1. Rakesh Rousan says:

        For Transaction rights of maxgain OD account , are the following act as pre conditions
        1. full disbursement of home loan
        2. registry of the property
        Full disbursement already done but property is under constuction can one get cheque books/ transaction rights , please clarify, if a link to relevant rule is provided it will be great.
        thanks
        Rakesh

  243. Jagruti G. Mahajan says:

    Dear Ashal,

    This is an interesting topic to read upon, Thank you for this article.

    Now, coming to my question, My husband has a SBI MG Home loan account of 17 L loan he took in the mid of 2010, So, my question is that, can there is a possibility that “GOLD “(it cost me around ~ 2.5L, I’ve kept this gold for my daughters marriage –long term planning) could also be park as surplus in to the MG account or it just the matter with money only?

    We have this gold deposited at SBI Bank locker outputs nothing, Perhaps can it be kept as security inside MG to assume as surplus and so we get some fruit out of it and when we have to plan to liquify gold, we just pull that out?

    What do you think?

    1. Dear Jagruti, sorry to say but you can deposit only cash in your OD account. In case you want to be benefited from the OD account against your gold holdings, please sell off your gold & then park the sell proceeds into OD account.

      Thanks

      Ashal

  244. Paritosh says:

    Thanks for the detailed info about SBI Max gain.
    I thought even SBI employee might not clarify this much.
    Keep up the good work.

    1. Dear Paritosh, I’m thankful that you found the article useful. Please kep posting your queries.

      Thanks

      Ashal

  245. NIKUNJ S says:

    if we have investable surplus of 100,000 Rs then

    Case 1
    Deposited to Max Gain account
    MG ROI 10 % then interest saving in a year = 10,000Rs

    case 2
    Not deposited to Max Gain account
    and investing to FD @ 8%
    case A) TAX SLAB 10 %

    Effective Interest paid = 9000 Rs (Interest 10000 Rs – Income Tax benefit @ 10 % = 10000 – 1000 Rs )
    Interest gained = 7200 Rs (100000 * 8 = 8000 Rs – 10 % tax = 7200 Rs)
    Total Loss = 9000 – 7200 = 1800 Rs

    case B) TAX SLAB 20 %

    Effective Interest paid = 8000 Rs (Interest 10000 Rs – Income Tax benefit @ 20 % = 10000 – 2000 Rs )
    Interest gained = 6400 Rs (100000 * 8 = 8000 Rs – 20 % tax = 6400 Rs)
    Total Loss = 8000 – 6400 = 1600 Rs

    case C) TAX SLAB 30 %

    Effective Interest paid = 7000 Rs (Interest 10000 Rs – Income Tax benefit @ 30 % = 10000 – 3000 Rs )
    Interest gained = 5600 Rs (100000 * 8 = 8000 Rs – 30 % tax = 5600 Rs)
    Total Loss = 7000 – 5600 = 1400 Rs

    Effective benefit of Interest/TAX etc per 1 lac = 1.8 % , 1.6%, 1.4 % respectively for tax slab 10 %, 20% & 30 %

    1. Dear Nikunj, thanks for the calculations.

      thanks

      Ashal

      1. Jainil says:

        Can you please confirm if the interest earned on the 1 Lakh deposited in OD account will attract tax? Since it is not a FD but an OD will it attract tax based on the tax bracket? Please confirm.

  246. Dear Krish, for your imaginary situation no tax benefit on the home laon for interest ‘ll be there as no interest outgo is there for SBI. As the parked surplus amount is 30L & the loan amount is also 30L, the calculated loan balance is nil & hence SBI ‘ll not charge any interest. As SBI is not charging any interest, the question of tax benefit on home loan interest does not arise.

    Regarding SBI people not sharing info, we can not do anything to SBI staff but we can surely gather information & give it to you in the form of this article.

    To opt or not to opt Max Gain for yourself is a personal call. 🙂

    Thanks

    Ashal

  247. Krish says:

    Let us take an imaginary situation described in the article.

    For some rich people who can afford to keep 30L in OD account and taken a MG home loan of 30 L for tax benefit purpose. The article says, interest part would accumulate in the OD account. It means the customer is getting the 10.5% ROI (equal to the home loan interest rate). This is more than the SBI giving for term deposits to regular FD customers.

    Furthermore, this rich customer gets the annual tax benefit of 1.5 lacs on interest and 1 lac towards pre-payment (if exercised).

    This customer is denting the SBI profit (no NIM) and also evading the tax to the govt by using this product. I clearly see some loop hole and not sure how it is allowed to float in the market.

    For me it is a confusing & complicated product. Even if the ordinary customer keeps an adding some savings to the OD account, it could lead to significant complexity in 5-10 years time with many entries. Ultimately customer may realise he is not getting due benefits from MG account and there are hardly anyone could clarify the matters from SBI.

    I would never opt for MG option with any bank.

    1. Dominic says:

      This is a standard product and available all major countries. In Early 2000 it was available with Citi, HSBC and StnChat. Later other banks started this product. There are variations between them.
      You have take an loan of rs. 100. You keep rs. 10 in your account. The EMI’s interest will be calculated for rs. 90.

  248. vishal says:

    HI Ashal,

    Nice article, very detailed info.
    I am having a home loan which will get over in around 6 years. I am still considering moving to MG primarily considering it as a substitute to FDs, As i believe i will save tax on FD and will also get better rate of interest. what is your opinion?

    1. Dear Vishal, your existing loan is in SBI or elsewhere?

      Please confirm it with SBI before thinking the benefits. Yes in a sense, the interest saved is better than money parked in FD.

      Thanks

      Ashal

      1. vishal says:

        mine is in other bank (Axis in this case).
        why would SBI not allow me migrate to MG? Any specific minimum loan amount requirement for this product? ( i have 15lk as principal outstanding)

        I see 10% tax saving on FD interest + higher rate of interest as key benefits for me.

        1. Dear Vishal, as you ‘ll be transferring your loan from Axis to SBI, it’s possible. Please contact the nearest SBI branch for actual action on your loan.

          Thanks

          Ashal

  249. angan chandra says:

    as per above article, in MG loan scheme, you need to park your surplus amount in OD account, the interest in surplus amount will get adjusted in home loan interest portion regularly.
    Now my question is what will be the interest SBI MG will give me for my surplus amount, i believe it will be apprx.4% as normal savings rate is 4% but my home loan interest will be 9.95%. So still do you think that MG is better than normal home loan?? If i have extra 2L surplus i will pre-pay it & will still save loan burden of 9.95% per year.

    pls. clarify if i’m wrong

    Regards
    Angan

    1. Dear Angan, please read the article again as well as the replies given by me to similar queries like you. SBI is not giving you the interest on parked surplus.

      Thanks

      Ashal

      1. Vinay says:

        Hi Ashal,

        First of all, Thank you very much for your patience to answer/educate us.

        With respect to angan chandra’s questions, in other way can’t we assume that we are indirectly getting 9.95% of interest (credited to OD Surplus a/c ex.1,667) on the surplus funds we parked in OD account?

        Please comment.

        Regards,
        Vinay

        1. Dear Vinay, the saving is there for 1667 Rs. which you can term indirectly earning of 9.95% ROI for your parked surplus amount.

          Thanks

          Ashal

          1. angan chandra says:

            Hi Ashal

            So if SBI MG indirectly gives ROI of Rs.1667/-@ 9.95% & home loan rate is also @9.95% then where is bank margin—in one hand bank gives interest of 9.95% & in other hand it takes the same rate from customer—then where is bank margin or profit???

            1. Dear Angan, SBI is not giving any interest. It’s your money (1667 Rs.) which you paid from your regular EMI & due to parked surplus amount, the same was not adjusted towards interest payment & hence it’s available as surplus.

              Regarding Bank’s Margin, being an Overdraft account, Bank anticipate that you ‘ll keep your free money in this account to save on interest outgo. Actually by keeping money, you are bringing down the risk of Bank. In the above example, as 2L Rs. are parked in OD account, bank’s actual loan balance is only 28L Rs. There is more to it. In case of a normal home loan, if you prepay, the interest earning for bank stops permanently for those 2L Rs. but here in case of Max Gain, there is a possibility that if you withdraw your surplus amount either partial or full, the loan ‘ll revert back to it’s higher balance situation & Bank ‘ll start earning higher interest.

              Thanks

              Ashal

  250. Kartik Sudarshana says:

    Thanks a lot for the article. I have a query on the below point:

    “I have taken the Max Gain for an Under Construction Property. Can I park surplus amount to save on interest outgo?

    The answer is yes & no both. Yes you can park your surplus during under construction phase but do remember SBI is disbursing partially at this juncture & in case due to any emergency you want to liquidate your surplus, SBI ‘l not allow the same. so park only that much surplus, you feel you ‘ll not need even in an extreme emergency.”

    Lets say I parked some 5L before getting transaction rights ( i.e. before SBI has disbursed full loan amount). I understand that I will now be able to withdraw this amount before getting transaction rights but can i at-least withdraw this amount after I get transaction rights?

    1. Kartik Sudarshana says:

      Oops.. Typo in the last line:

      I understand that I will NOT be able to withdraw this amount before getting transaction rights but can i at-least withdraw this amount after I get transaction rights?

      1. Dear Kartik, yes after the final disbursal as & when your transaction rights are axctive you can redeem the amount as per your need. In case there is delay between final disbursal & transaction rights, you can still withdraw through cheque book.

        Thanks

        Ashal

        1. Arindad says:

          Dear Ashal,
          I saw this reply just now. So its clear for me now.

          It will be great if Karthik can tell us whether he was able to withdraw parked surplus after the construction. If someone has done it already, then thats the best way to confirm.

          1. ashalanshu says:

            My own friends were able to withdraw. What more proof do you want?

            Thanks

            Ashal

            1. arindad says:

              Oh great, that’s what I wanted to know. Thanks.

  251. Rashmin says:

    I appreciate if any one can share, excel sheet for SBI MG on daily interest calculation basis, where benefit can be more visualise

    1. Dear Rashmin, can you not prepare the excel sheet yourself for the benefit of all of us? Please use the example numbers given in the article above? Please try to understand. Each individual’s loan amount ‘ll be different & so ‘ll be the surplus amount then how can we create a fixed sheet for such floating situation?

      If all of you are so much interested in exl. sheet, I ‘ll try to create one. 🙂

      Thanks

      Ashal

      1. Rashmin says:

        Dear Ashal, I appreciate if you can help for that, i am facing problem for the interest calculation part as it is charging on daily basis.

        1. Dear Rashmin, Please contact me over personal mail id.

          thanks

          Ashal

  252. Shankar says:

    Dear ashal.

    One more imp thing, wat about for those who claim tax benefits for interest paid under Sec 80c, wont they get less claim? so , a complete cost-benefit analysis needed , I guess?

    1. Dear Shankar, the interest benefit comes under section 24(b) not section 80C. Interestingly the benefit is limited to just 1.5L Rs. for a self occupied house. there is more to it. As you are regularly paying your EMIs, what ‘ll be the situation in your loan after 5-7-10Y? The interest ‘ll be same as was in 1st year or reduced one? So where is the cost benefit analysis required here?

      Thanks

      Ashal

  253. Vijay says:

    Hi Ashal,

    Thanks for the detailed article,

    As from this article it looks principle is not getting paid automatically but whatever additional amount left is available for withdrawal. This looks different from HSBC where amount of interest saved is used to pay principle and hence tenure gets reduced. Pasting link for more info.
    http://www.hsbc.co.in/1/2/personal/loans/smart-home

    So my question here is, if one want to reduce is principle (for SBI max gain) then he should ask bank specifically to deduct x amount permanently?

    1. Vijay says:

      One more question is..
      If you compare two schemes keeping every thing constant(surplus cash,ROI etc) then which scheme is beneficial?

      1. Dear Vijay, in case of normal home loan, the liquidity of your amount is not with you & it’s gone forever as & when you prepay. In case of Max Gain, you are saving interest as well as keeping your liquidity intact.

        At the end of the day, it ‘ll be a personal call.

        Thanks

        Ashal

      2. Dear Vijay, HSBC’s draw back –

        1. Higher ROI for Smart home loan.
        2. Saved Interest is used for Loan repayment so it’s no more liquid money for you. In case of SBI, the same is available to you as surplus. It looks nice that loan term is over in 126 months but in actual bank is earning more from you.

        Thanks

        Ashal

        1. Sanjeev says:

          Hello ,

          if my intrest will be less , if I am putting surplus amount on OD account , in that case my principal will be more , example..
          I am paying 24K EMI every month and out of 24 k , 16K is my intrest part, and 8 k is my principal.. when I added 2 L surplus amount on OD account then my EMI will be same but what I understand next month my intrest will be less suppose 14 k , so out of 24K now my principal deduction will be 10k , In this case , my total tenure should less ..
          please correct me if I am wrong ..

  254. Dear Shankar, first understand, what is happening on EMI credit day? The EMI is debited from your designated bank account. I67 Rs. t may be from SBI or non SBI. Now on the same day, the EMI is credited into your OD account (Max Gain account). Now on this very same day, the principal part of your EMI is adjusted immediately towards the total loan balance. Being an OD account, interest ‘ll not be charged on the EMI day. For interest payment, you w’d have to wait till last day of the month. Now on the last day, the SBI system ‘ll calculate your interest liability on the basis of book balance maintained on day to day basis by you. In our example, for 1st month, the saving of interest is 1667 Rs. as the calculated interest is only 23334 Rs. against 25000 Rs. interest which was to be charged in original condition.

    Thanks
    Ashal

  255. Shankar says:

    dear Ashal,

    thats my doubt , how we are able to reduce interest payment on EMI

    You paid EMI of 28951 in the 1st month as per example. Now instead of paying 25000 Rs. interest you are paying only 23334 Rs. & the remaining interest part (25000-23334 = 1667) from your EMI is available in your OD account as surplus

    So, intead of Rs 25000 , we are paying less interest as rs 23334 , this we do only if we are earning some interest on Rs 2L parked in OD account and deduct from original EMI ,please correct my understanding or kindly explain this part again…

  256. Shankar says:

    Dear Ashal& Manish,

    So, wat I see ,this OD account is type of SB account as it pays interest , so in nut shell we can say

    Net EMI= EMI-interest earned on amount kept in OD account?

    So, this OD account is normal SB type account paying interest @4% etc, isnt it?

    1. Dear Shankar, from where did you get to know that the Account is a SB acount & you are earning 4% ROI on your surplus amount. Please read the article again with a cool head. there is no earning from SBI to you in terms of interest. What’s hapening here?

      You paid EMI of 28951 in the 1st month as per example. Now instead of paying 25000 Rs. interest you are paying only 23334 Rs. & the remaining interest part (25000-23334 = 1667) from your EMI is available in your OD account as surplus. Now do tell me in the above calculation, where is that 4% ROI you are referring to?

      Thanks

      Ashal

  257. Hi Ashal,

    Thanks for the detailed article.

    I wanted to know if an individual wants to make partial pre-payment, then how does he go about doing it?

    Does he transfer the amount directly from the OD Account to the Loan Account? or he needs to inform the bank about it and the bank will debit the amount from OD Account based on instructions given by the account holder and transfer the money to the loan account resulting in partial pre-payment.

    Regards
    Gopal

    1. Dear Gopal, make no mistake. There are no 2 accounts. The OD account is itself your loan account. In case you want to prepay, just contact your loan serving brnach & the staff ‘ll do needful to adjust the surplus amount lying in your OD acount towards loan prepayment.

      Thanks

      Ashal

  258. Vijay says:

    Hi,

    This is a very good detailed explaination on Max Gain. One clarification or additional information required is the taxability on the interest gained in OD ? From limited knowledge i believe we would need to pay tax for the same as per tax bracket and it may not qualify in 80TTA aslo ..

    Regards
    Vijay

    1. Dear Vijay, there is no tax on the saved interest in OD account. it was your capital & already considered for taxation when you earned it as your salary or busines income.

      Thanks

      Ashal

      1. Vijay says:

        Thanks Ashal for the clarification. This makes it even more interesting.

  259. Vineet says:

    Hi Manish,

    Thanks for informative article. I suppose such documentation should be available as product brochure on SBI site. I have SBI maxgain account however my loan is not yet fully disbursed, so its full benefits have not yet realized. Do they charge for checkbook for OD account and is there annual fees for ATM card?

    1. Dear Vineet, The OD account (Max Gain account in commona language) is a current account & SBI may charge for Cheque books & ATM card. First Cheque book is free of cost. For ATM cards, SBI is already charging annual fee.

      thanks

      Ashal

  260. Dear Vikrant, please do not make same mistake as dear bharat made above. There is no earning to you from SBI. Yes SBI is deducting less interest. So there is a saving only & question of compounding does not arise.

    Thanks

    Ashal

    1. bharat shah says:

      @Ashal,
      ‘Dear Vikrant, please do not make same mistake as dear bharat made above. There is no earning to you from SBI. Yes SBI is deducting less interest. So there is a saving only & question of compounding does not arise.’
      sorry, i read above only after posting my further query ,and something i understood terribly wrong. if there is no earning on your surplus OD a/m, then is there any change in EMI? if EMI remains same, the period of repayment same and no earning on OD surplus, what is benefit of OD surplus?

      1. Dear Bharat, there is no earning but saving of interest out go. From opur example discussed above, you are saving 1667 Rs. in the forst month against the parked surplus amount of 2L Rs. For next month, the calculation ‘ll change due to increased surplus as it ‘ll be 201667 Rs. & accordingly you ‘ll be paying even less interest than prev. month. So Months after Months, you ‘ll save a lot of amount as you are not paying the actual due interest as per original loan amortizxation schedule.

        thanks

        Ashal

        1. bharat shah says:

          @Ashal, thank you very much for clearing my understanding. what i want to add ,that one way , it is getting @ ROI of home loan % interest on our surplus , even tiny, which could otherwise earn saving bank interest. in that way , the observation of Vikrant is correct, and one can foreclose his loan , if enough a/m is gathered in OD account. of course it is one’s personal call ,as you stated earlier. is any thing incorrect stated by me? thank you again.

          1. Dear Bharat, yes in that sense, you are earning income equal to home loan ROI. Regarding the foreclosure of your loan, I don’t think prepaying ‘ll be a wise option & letting go your liquidity.

            Thanks

            Ashal

            1. Ravi Kishore says:

              Thanks Ashal for clarifying this doubt, last week I applied for home loan in SBI and opted for Max Gain. At that time I was really not clear on many things related to Max gain. Very helpful post for me to manage my MG account in future.

              In my question yesterday (25/09/2014) I made the same mistake thinking saving of Rs 1667/- will be credited to my OD account. But as it appears from your answers, this will not happen, “so there is no question of separate Y :)” . Albeit I will have reductions in my interest part of outgoing constant monthly EMI (so indirectly I will be reducing principle part of my loan amount, which eventually can help me in earlier loan closure).

              Need your reply on one more question (though u have mentioned in earlier answers that prepayment is customer’s choice):
              Query:

              I guess there should not be any restrictions on the prepayments. i.e. even if I have MG account and I have some surplus amount parked in MG account. And lets say I get some extra money, and I want to use this money for prepayments instead of parking it in MG account. Is this possible ?

              Thanks,
              Ravi–

            2. ashalanshu says:

              Dear Ravi, let me counter question you. What’s the benefit of prepaying your home loan?

              Thanks

              Ashal

  261. vikrant says:

    Very interesting point is, The loan is term is not reducing, but you are getting a return of 9.90% on your parked money, Which is very good, compound it and it will be easier to foreclose the loan.

    1. ur rite vikrant… if u need liquidity and park the extra funds in other manner u cannot earn interet at 9.9% also u cannot part prepay ur home loan as u need liquidity .. therefore if u have a sbi max gain account then by parking the extra funds there u can save ur interest @9.9% which otherwise could not have been saved have it been a normal home loan .. therefore goin by the saying MONEY SAVED = MONEY EARNED … u earn money at 9.9%

  262. bharat shah says:

    thank you Ashal for the article. as i understand from the article, if we keep crediting the OD account whatsoever we could in addition to regularly paying our EMI, OD account would keep adding at rate of ROI of our home loan, provided we would not withdraw any from OD. and at a point of time, we could even ask to transfer it to our home loan account , to reduce the balance principle a/m.
    is my understanding correct?

    1. Dear Bharat, please do understand that SBI is not giving you anything extra as interest on your parked amount. it’s not deducting interest coming from your EMI on regular loan but adjusting the surplus against the actual loan balance & deducting the interest only on the calculated loan balance.

      To prepay or not to prepay ‘ll be a personal call.

      Thanks

      Ashal

      1. bharat shah says:

        @Ashal, thank you for your reply , but still i am not clear. Let me reproduce what you stated:
        case – 2 Max Gain home loan

        Your 2L Rs. are parked in that OD account & the interest for the very first month ‘ll be calculated on 28L Rs. & thus it ‘ll be 23334 & thus there‘ll be an interest saving of 1667 Rs. which‘ll remain available in your OD account as surplus along with your parked surplus 2L Rs. so for next month, the parked surplus amount ‘ll be 201667 Rs.

        Please do note in case 2 above, Your loan term is still 240 months but the saving of interest ‘ll keep on increasing on mly basis from the parked surplus & of course the liquidity of those 2L Rs. is there.’
        what i understand in above cited case, that the interest saving 1667 Rs. will be remain surplus with 2 L Rs. in OD account , making parked surplus a/m 201667 for next month ,which will make the interest saving more than 1667 Rs. and increase surplus a/m more than 201667 + 1667 , and thus keep on rising , if no withdrawal is made from OD till 10 yrs. or so.as I understand , my EMI will be paid same during the period (subject to no change in ROI). So though i am not saving any on EMI or period of repayment, i would have 2 L plus the interest saving during the period in my OD at my disposal.
        is my understanding correct? if not, kindly correct me.

        1. Dear Bharat, yes, now your understanding is correct.

          Thanks

          Ashal

          1. Himanshu Pant says:

            A very informative article.. So can we say that the benefit one is having in addition to the liquidity is getting a better rate of interest on the surplus saving as home loan rate is more than deposit rate at the moment ?

            1. Dear Himanshu, you can say so for the saved interest amount.

              Thanks

              Ashal

            2. vivek says:

              Hi Ashal,

              As you said that we can withdraw interest amount also, so do we need to pay tax on this income.
              If tax will be applicable than at what rate? Will it be considered as extra income and will add to our income slabs?

              Thanks
              Vivek

        2. Avinash says:

          I am confused on the part of accumulated saved interest.
          It is clear that we can withdraw 2L in this case. But can we also withdraw the accumulated interest ?

  263. Thanks for this detailed post

    I was also about to request Manish for an article on Current & Overdraft Account in case of Home Loans.

    Last week only I came to know about Current & Overdraft Accounts while browsing the web. And I also read that some banks are charging extra for this facility (good to note that SBI does not charge extra)

    1. Dear Karan, SBI is not charging any differential ROI. Yes the MNC banks (CITI, HSBC, S&C) as well as home grwon PSU bank IDBI is also charging additional ROI for this OD linked home loan.

      I’m not considering PNB here for the fact that the product is a combo & the OD part is limited there.

      Thanks

      Ashal

      1. Ohk… Thanks Sir for your inputs..

  264. Ankit says:

    The only issue that I see with this arrangement is the fact that once a person has spare cash parked in the OD account…there might be a tendancy to start utilizing bits and pieces from that amount for discretionary spending….In my opinion, pre-paying once and for all with the amount gone from your disposal might not necessarily be a bad thing..It automatically gets you to only want and need items that can be purchased with the money that you have remaining..

    Disclaimer: I have a home loan through HDFC and have been prepaying on a regular basis to reduce my loan tenure..by keeping the EMI the same..

    1. Dear Ankit, discipline is the key everywhere. be it SBI max Gain or anything else.

      thanks

      Ashal

  265. Dear Karthikeyan, please read the article again. the loan term does not reduce in Max Gain.

    thanks

    Ashal

  266. Dominic says:

    Your contradicting in your answers in “If I’m parking some money on monthly basis or in lump sum, will my loan term come down or EMI go down?”
    and “For an imaginary situation, my loan amount is 30L Rs. & parked surplus amount is also 30L Rs. Does it mean, my loan is closed”

    Term will definitely go down and not the EMI. If you park surplus money then the principle part of your EMI will be more and obliviously the Loan term will go down.

  267. Karthikeyan says:

    Hi Manish,

    I didn’t understand this part –

    “Case – 1 Normal home loan

    Your 2L Rs. is gone & outstanding loan amount ‘ll come to 2796049 & interest outgo ‘ll still be 25000 Rs. but the no. of months ‘ll come down from original 240 to 198 months.”

    If you make a 2L prepayment, shouldn’t the outstanding loan amount come to 28L, and the interest amount reduce as well? I agree that the term will reduce by 42 months (approx).

    By my calculations: (after prepayment)
    Loan Balance – 28L
    EMI – 28,951
    Interest portion – 23,333
    Principal portion – 5,617

  268. pattu says:

    Manish,
    The credits should read:
    “THE most active and helpful member of our Jagoinvestor forum”
    🙂

    1. Dear Pattu, thanks for the praising words. All this love & affection from all of you is my driving force.

      Thanks

      Ashal

  269. Shankar says:

    Just saw ur post on SBI MG plan , I have a question , in your example I reproduce here again..

    Case – 2 Max Gain home loan
    Your 2L Rs. are parked in that OD account & the interest for the very first month ‘ll be calculated on 28L Rs. & thus it ‘ll be 23334 & thus there‘ll be an interest saving of 1667 Rs. which‘ll remain available in your OD account as surplus along with your parked surplus 2L Rs. so for next month, the parked surplus amount ‘ll be 201667 Rs.
    Please do note in case 2 above, Your loan term is still 240 months but the saving of interest ‘ll keep on increasing on mly basis from the parked surplus & of course the liquidity of those 2L Rs. is there.

    NOW , CAN I WITHDRAW THE FULL AMOUNT RS 201667 from the OD account after I get interest benefit ? and transfer again this to
    my SB account ,Secondly , is there any lockin period of amount invested in this OD account? or we can deposit or withdraw any number of times /any amount as per our wish?

    1. Dear Shankar, Yes is the answer. You can withdraw the full amount. No there is no lock in period in the OD account to withdraw your own surplus amount.

      thanks

      Ashal

      1. Ashish says:

        I dont think this calculation is correct.

        Ashal as you are saying you can withdraw 201667 is something what i am not understanding.

        Remember its an OD account, so no intrest is accrued on this account , so if you have invested 2L how can you withdraw 201667.

        Its just that principle outgo is more from EMI since intrerst component is reduced. But you cant withdraw that reduced intrest amt.

        Can someone plz clarify this.

        1. Dear Ashish, please read the article again. In the above example, please calculate the mly interest for 30L Rs. loan @ 10% yly ROI & then calculate the interest for 28L Rs. loan @ same ROI. There is a difference of 1667 Rs. This is the saved interest & it ‘ll be added to your already available surplus of 2L Rs. & that’s how you can withdraw 201667 Rs. in 2nd month if you want do so.

          Thanks

          Ashal

    2. Sachin says:

      Yes Shankar you can withdraw 201667 back to your SB account.
      No locking what so ever, you can deposit & Withdraw any time.
      But, do note that SBI calculates the interest on daily basis and not monthly, So the day you shift the amount out from the account. The benefit stops.

      Dominic – SBI is not recalculating the Tenure based on the surplus. So in their books the Tenure will stay constant. Your Drawing power & Current Limit will keep reducing as per the original Amortisation schedule, and won’t consider the saved interest as part payment. So at one point where your surplus equals to the Loan outstanding. You should either close the loan account or if you want to maintain the loan and the liquidity, then start using part of this surplus for some other purpose. Cause I think SBI won’t pay the same rate of interest if your surplus is more than the limit mentioned.

  270. Nikhil says:

    Thanks Ashal for the detailed article. Here are a few queries:

    1. In my SBI MG account, I can only see the ‘debit interest’ entries, nothing related to the debit of the principal part. that is a bit confusing. Could you please expalin in more details, how is the principal part is debited?

    2. I was under the impression that the amount saved in the interest is deducted from the principal. However, from the article, it looks like only the scheduled principal amount is paid, nothing extra. Is that right?
    For example, consider the imaginary situation you have mentioned where the surplus equals the outstanding. Here, the EMI amount will be credited to the OD account but only the scheduled principal part is deducted. I thought that the entire EMI amount will be deducted from the principal in this case. Comments please.

    3. Recently, I got the interest certificate of my OD account for tax purpose. However, the interest and principal amounts from the certificate do not match with my account statement. I simply added the interest amount from the ‘debit interest’ entries. This does not match with the interest amount on the certificate. Also, I assume that
    sum (EMI) – sum (interest) = Principal repaid. Is that right? This amount also does not match with the principal amount on the certificate. Am I missing something?

    1. Dominic says:

      Re Point 2:
      Your are right. The entire EMI will be deducted from Principle. I am not sure about MG but I have a similar loan from HSBC.

    2. Dear Nikhil, let me try to answer your queries.

      1.To understand the principal reduction, please kep an eye on your drawing power. check it before EMI date & after EMI date.

      2. No, the loan principal ‘ll be adjusted only as per your loan amortization schedule. the interest part of your EMI ‘ll be available as surplus amount.

      3. Please mail the account statement to me along with your interest certificate. I w’d like to check it.

      Thanks

      Ashal

  271. kvi says:

    Useful brief and quite in detail. Thank you for the same.

    1. Dear KVI, thanls for the thing that you found the article useful. next time when some body discuss with you regarding Max Gain, I’m sure you can answer a lot of things clearly for the benefit of that person.

      Thanks

      Ashal

      1. Saravna kumar S says:

        Hi Ashal,

        Is it possible to foreclose the Home loan( Max gain )

        1. yes it is possible to foreclose the max gain account. u jus have to clear the the total outstanding amount and can ask the bank to close the account completely and issue a no due certificate.

    2. Romesh jain says:

      Dear Mr. Ashal,

      Thanks for nice information on SBI MG, as I am planning to move my an year old LIC Home Loan to SBI because of LIC Higher Interest Rate. As most of my question got answered from your article But Still I have one question, Can we make a pre payment of our Loan in partially form??

      For example , If we have a loan of Rs. 30L and over a period of 2 Yrs we have parked 3 L as OD in Max Gain account which will bring down my interest portion, Can I go ahead and ask Bank people to deposit 2 L as prep payment amount against my principal so that my principal amount comes down by 2L wrt to what ever it is at that moment of time.

      Can you please confirm the same ??

      regards,
      Romesh

      1. Dear Romesh, sorry for late reply. What benefit w’d you get by this early prepayment? You were already paying less interest due to parked amount.

        thanks

        Ashal

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