In today’s highly competitive Indian home loan market, buyers have great flexibility in choosing their financier. Lenders are trying to attract prospective borrowers with flexible repayment and loan offers, which have never been seen before in the Indian home loan market.
Home Saver loan accounts is one such attractive housing loans scheme, in which banks allow you to open a savings or current account, which is linked to your primary loan account. Any amount in this linked amount works to reduce your overall outstanding principal loan balance and considerably reduces your overall interest burden. Please read our blog post on home Saver loan accounts to know more about these accounts in detail.
SBI Maxgain Advantage Home Saver Loan Account
SBI Maxgain advantage is one such home Saver loan account, which is primarily customizing for customers wishing to opt for an overdraft facility for their housing loans. State bank of India provides the loan account similar to a saving or current account. You can park your surplus funds in the loan account, which effectively earned the interest on the same rate.
SBI Maxgain advantage home loan scheme serves to minimize your interest costs by enabling you to park your surplus fund in SBI Maxgain (with the benefit to withdraw the surplus funds whenever you require), specially in the wake of low yields from other deposits and investment avenues.
SBI Maxgain Advantage Calculator For Home Loans
Here we present you a simplified version of SBI Maxgain home loan calculator, which allows you to understand how SBI Maxgain allows you to save on the total interest paid and reduces the tenure of your loan period.
Assumptions: The simplified example shown in this loan calculator assumes the following.
- Loan amount = Rs. 20 lakhs
- Annual interest rate = 10.5%
- Loan period = 10 years
- Extra deposits or withdrawals = as shown in the table
Results: The results obtained are as follows
- Scheduled EMI = Rs. 26,987
- Scheduled number of payments = 120
In this example, we have assumed that the borrower has made for payments of Rs. 15,000, 20,000, at 12,000 and 50,000 each in the first, third, sixth and seventh month respectively. Further he has withdrawn Rs. 10,000 and Rs. 35,000 in the second and ninth month respectively.
MaxGain Advantage: Following is the summary of the advantages derived from these transactions.
- Total interest saved = Rs. 89,265
- Tenure of Loan (saved) = five months
You can play around with the figures and calculate the total interest saved and the total tenure of the loan saved the by entering different figures and amounts. We encourage you to download the basic MS Excel template file for SBI Maxgain loan calculator on your computer by clicking on the link given above. This will help you to understand the basic calculations and formulae used in preparing this Excel SBI Maxgain calculator.
Demerits of SBI Maxgain Advantage home loan
The flip side of SBI Maxgain Advantage home loan scheme is that it is suitable only in cases when a good amount is lying un-utilized in your savings or current accounts. If this is not the case, then you may not be able to derive the maximum benefits from this loan scheme. It is important to note that most of the home Saver loan schemes like SBI Maxgain advantage charge you a higher interest rate of the order of 0.5% to 1% as compared to plain vanilla home loan schemes.
5 Practical tips to derive maximum Benefits of SBI Maxgain Advantage
- Always transfer the salary and other incomes to the OD account as soon as you receive them.
- Try to avoid using ATM card for the OD account. This is important because this account is expected to allow large withdrawals. It may prove to be a costly mistake in case you happen to lose your ATM card and somebody try to misuse it.
- If you are comfortable using Internet for net banking, then you can open in another saving bank account in the same branch and transfer money from your OD account to this new saving bank account as and when required. You can use the ATM card from this new saving bank account which will protect your OD account from the risks of fraud.
- Make it a habit to use your OD cheque-books. You can get unlimited OD cheque-books without any cost.
- Close all other bank accounts, if possible, and transfer the un-utilized amount lying there to your OD account.
Purposes for which you can avail SBI Maxgain Advantage Home Loan
- To purchase or construct a new/old house/flat
- To repair/renovate/extend/alter an existing house
- To purchase ready built flat/house/apartment from cooperative Group housing societies/State Govt. Housing Board/other Govt. Agencies/ private builders of repute.
- To furnish/purchasing consumer durables for a new house