All about SBI MaxGain Home Loan Scheme features and benefits

You have a home loan of Rs.1 Cr and suddenly you receive the cash of Rs.30 lakh and want to reduce your home loan liability by depositing it. However, the chances are that you may need this Rs.30 lakh after one year. In this case, how to optimize this Rs.30 lakh? The regular loans will not provide you to get back this Rs.30 lakh. The answer is SBI MaxGain Home Loan Scheme.

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Before proceeding further, let us understand few basic concepts of banking.

What do you mean by Over Draft (OD) Facility?

Banks provide such type of loans against the collateral (security against a loan) like property, FDs or any other assets. It is exactly like your credit card limit. You pay interest only on the withdrawn amount or used amount, but not on the overall limit. However, here in this case there is no feature called grace period or interest rate free period. Interest charging start immediately you withdraw from OD. Let us say bank sanctioned you OD of Rs.30 lakh. The next day you withdraw Rs.5 lakh for some emergency then the interest will be payable only on Rs.5 lakh but not on a whole sanctioned Rs.30 lakh. Now, after a few days if you deposit Rs.2 lakh to OD account, then the overall usage is Rs.3 lakh (Rs.5 lakh withdrawn-Rs. 2 lakh deposited=Rs. 3 lakh). Therefore, interest will be only on Rs.3 lakh. You can withdraw the amount up to maximum sanctioned limit, i.e. in this case, up to Rs.30 lakh.

Usually, such types of loans are very handy when you frequently receive some surplus. Because, in normal loans once you pay the excess surplus towards a loan, then your EMI will go down. However, you cannot get back the cash immediately. The reason is, you have to apply for a top-up loan. Once it sanctioned and amount released, then only you can get the cash. But in case of ODs, you can withdraw it immediately and use it for emergencies.

Hence, the liquidity of surplus amount you have is more when it comes to ODs than other types of loans.

SBI MaxGain Home Loan and OD–

SBI MaxGain Home Loan is nothing but the OD sanctioned to you. In this case, the collateral is your home loan. So whenever you have a surplus then you deposit to this MaxGain account. This deposit is treated as repayment towards the outstanding loan amount. Interest on outstanding for that period reduced. Hence, the interest will be charged only on the Actual outstanding Principal=Outstanding Principal-Surplus parked.

Hence, this gives you more flexibility to utilize your surplus cash and along with that, reducing the interest on your home loan. Below is the typical SBI Home Loan Account Statement.

Now let us discuss few wordings, which you came across from the above statement.

What do you mean by Drawing Power?

Drawing power is nothing but your outstanding balance. It is not the actual original loan amount sanctioned. However, it is the current outstanding. Hence, this is the actual outstanding principal balance. In the above image, Drawing Power is Rs.35, 00,500.

What do you mean by Available Balance?

This is the un-disbursed amount (in the case of Construction Linked Payment or CLP)+Any Parked Surplus+Accrued Interest. In the above the image, it is Rs.1, 00,000.

What do you mean by Book Balance?

Book Balance is nothing but the difference of Drawing Power and Available Balance. Hence, in the above case the drawing power is Rs.35, 00,500 and Available Balance is Rs.1, 00,000. Therefore, the Book Balance is Rs.34, 00,500. This will be shown in negative.

Please note below points about SBI MaxGain Home Loan.

• Your EMI and tenure of the loan will never change during the course of a loan tenure. It is fixed whether you park your surplus or not. Let us say currently outstanding is Rs.10, 00,000 and EMI is Rs.30, 000. You parked surplus amount of around Rs.5, 00,000 to MaxGain Account. So the Book Balance will be Rs.5, 00,000. Interest will be calculated on Rs.5, 00,000. SBI collects Rs.30, 000 EMI from you. You may all know that EMI includes Principal Part and Interest Part. However, this EMI includes the principal part towards Rs.10, 00,000+Interest part on Rs.5, 00,000 Book Balance+Surplus interest part. Surplus interest part arises because EMI is constant. Principal payment kept constant. However, the interest was calculated on Book Balance of Rs.5, 00,000 but not on the initial outstanding of Rs.10, 00,000. Therefore, this surplus interest part is kept in an available balance. This you can withdraw it at any point of time.
• As I said above the interest rate is calculated on the account balance on the daily base. However, it is debited on the monthly base.
• Any surplus amount you deposit into Max Gain Account is not treated as principal loan repayment. Hence, such deposit not considered for tax saving purpose under Sec.80C. In addition, the interest saved under parking the surplus will not be eligible for tax deduction under Sec.24 B of Income Tax Act.
• This loan does not charge anything extra. Therefore, it is treated as a typical home loan of SBI.
• The available balance amount can be used for any purpose using the ATM Card they provide.
• You can use the available balance amount for paying any type of utility bills, credit card payments, online shopping or register ECS for your investments like Mutual Fund. However, an available balance is the limit for these transactions.
• If you use your Max Gain ATM card in other bank ATMs then they charge you for the first usage itself. Because this is Over Draft facility. Hence, no free transactions available for other banks ATM usage.

Special care in case of under Construction Home Loan of SBI Max Gain

In the case of under construction property, banks usually disburse the loan amount in part. You have the option either to pay only the interest part of the disbursed loan amount or the actual EMI (which will be considered based on the sanctioned principal amount).

In the case of SBI Max Gain you can opt both the options and also park the surplus money. However, you cannot withdraw the surplus you deposited.

Advantages of SBI Max Gain Home Loan–

Liquidity-As I said initially when you are expecting some surplus cash, then you can park that surplus amount into max gain account and save more. Along with that, you can withdraw it at any point of time exactly like your savings account.

Interest Saving-When you park any additional surplus, and then it automatically generates the saving by way of interest saved. This you can utilize for other purposes.

One point for all your savings account transactions-You can route all your savings account transactions to max gain account. By doing this, you earn more than your savings account. It is easy to monitor your transactions. In addition, by using the net banking facility you can schedule your EMI of this home loan from Max Gain Account to savings account easily in advance.

Better Returns than FDs-During the falling interest rate, by keeping your surplus in such product will actually earn you more. Along with that, it is more liquid than Bank FDs. Whereas, in the case of Bank FDs, if you premature the FDS then there will be a penalty.

Disadvantages of SBI Max Gain Home Loan–

Complicated to understand-Few feel it complicated to understand. Because I know many, who having this loan never benefited.

Lesser Tax Benefit-Let us say you planned to save more by claiming interest payment under Sec.24 B of IT Act. But due to depositing excess cash into this amount, the interest on this excess amount will not be part of deduction for Sec.24 B. Hence, you may end up in less tax benefit.

Hope this inform cleared many of your doubts.

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