Should I prepay my SBI maxgain loan or let my money sit in saving bank account ?

POSTED BY ON August 5, 2014 6:46 pm COMMENTS (3)


I have SBI Max Gain home loan on a flat in Bangalore and possession would be in FY 2015/16. I am paying the interest on disbursed amount (instead of total loan amount) every month.

I have 2 lakhs sitting in my SB account which give me 4% interest. I am an avid follower of this site and ET Wealth and I am aware of Max Gain rules and Taxation rules. I am planning to transfer 2 lakhs to SBI Home Loan account where I am charged 10.25% interest rate. This would reduce my EMI and Principal amount too.

Should I prepay the loan or let it sit in SB account?



3 replies on this article “Should I prepay my SBI maxgain loan or let my money sit in saving bank account ?”

  1. Credexpert says:

    Dear Sir,
    If the savings were for repaying your home loan and you also want to avail the tax benefits, you can repay the same once you get possession of the house property. However, compare this benefit that you will get against the reduction of interest during the period of under-construction on pre-paying the principal. The choice depends on what is more suitable for you.


  2. Credexpert says:

    Dear Siva,

    Transferring the amount would reduce your outstanding amount and interest amount. You may consider it if it is beneficial to you overall. The decision should be made as per your personal requirements. Also, make sure you have other saving accounts and it is not advisable to empty this savings account entirely and have no savings left at all.


    1. says:

      Thank you CredExpert.

      I have separate savings as contingency fund. This saving are made for home loan repayment. I am in a dilemma of saving it until next year for prepayment and avail tax benefits (or) prepay it now (or) buy a car.

      Please suggest.

      Siva Mohan

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