Which one would be beneficial putting money in OD account or reducing the loan amount?

POSTED BY Sourav Ghosh ON April 6, 2014 2:22 pm COMMENTS (4)

I have got SBI Max Gain loan with OD account with loan approved for say X amount for an under construction property where SBI is releasing loan as per progress of construction.My full EMI has started .Now I have got some dispensable amount which I can either use to pay the builder and reduce my loan amount (hence EMI can also be reduced) or  put the same money in Max Gain OD account so that it reduces my future interest and continue with previous loan amount and hence EMI.

Which one would  more beneficial putting money in OD account or reducing the loan amount ?? .

4 replies on this article “Which one would be beneficial putting money in OD account or reducing the loan amount?”

  1. ashalanshu says:

    Dea Dhivya, just park your surplus 2-3K amount in Max Gain account. it’ll help to cut down your interest outgo a bit. In future as and when you need so, you can withdraw such 2-3K amount.



  2. Dhivya T says:

    I also have a similar question. I have a SBI home loan with max gain facility. I have parked some extra cash in the OD account. However there is a minimum amount left at my hand each month say 2k-3k.
    Can I pay this extra amount to the Loan account directly n reduce the principal amt? or leave it max gain account? which is more beneficial?
    I donot want to add up this amount to the EMI as this might not be consistently happening for the whole year.

    also, if I keep transferring such small chunks of amount every month, wat will be the effect of this change to my EMI break down or the number of years??

  3. ashalanshu says:

    Dear Sourav, are you sure that in future few months you ‘ll not need this money for any other liquidity or emergency situation?



  4. Viren Phansalkar says:

    It would be a personal choice. If you have sufficient emergency fund and very few or no short term goals, you may afford to lose the liquidity that OD account has.

    What I mean is, if you can afford to lose the liquidity, you may decrease the loan amount. However, I doubt, if SBI decreases the sanctioned loan amount.

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