Thank you for the support that being provided for the queries regarding SBI Maxgain. The blog and further the discussion on it are helpful for many. I could understand more about the SBI Maxgain home loan product and chose it with the help of your blog and that from the http://www.jagoinvester.com site.
With the new changes in home loan rate with effect from 1st Jan 2017 some queries are creeping up about this Maxgain Product. I could not gain much information from SBI RACPC office at Thiruvananthapuram other than the fact that a processing fee is required to switch to the new maxgain rate for existing buyers. The RACPC was not having the details about the fees and was not in a position to explain the queries which i am listing here.
Situaution : The recent change in SBI home loan rates show the effective rate for new max gain customers is 8.80% (upto 75L). The Max gain rate for existing customers are varying from 9.15% to 10.15%.
My queries are,
1. Is it possible to get the reduced rate of 8.80% (9.10% for >75L) for existing buyers. If so, what is the procedure ?
2. Normal housing loan rates are from 8.55%(initial 2 years) upto 8.65% (8.70% for >75L). Such discrimination between normal loan and Maxgain was absent before the recent change. Is there any explanation for this?
3. Is it possible to switch from Maxgain to normal housing loan for existing Maxgain buyers?
4. With this discrimination in rate between normal home loan and maxgain, can we have a spreadsheet with various factors such as tenure, loan amount, rate with which a decision can be made for a new home loan buyer / existing buyer to choose among the two by considering the surplus that the buyer can be put into the OD on a monthly / annual basis ?
Sadly they don’t know the procedure and also never care to update it.
- There is no certain declaration from SBI on this issue. But in my view YES.
- It is purely their decision. Hence, neither I know the reason nor anyone on this earth 🙂 Hope you got my point.
- But why you want to switch? I suggest you to stick to MaxGain.
- Regular loan and MaxGain comes with different positives and negatives. Hence, hard to say also as they change the rates and procedure frequently.
Thank you for the quick reply.
As of now my plan is to stick with Maxgain by paying the switching fee.
I wish to make a detailed study on the impact as per my query on point 4.
I will update here on the queries as and when i get some solid info.
I was reading this excellent article which is giving more insight into the queries that i have posted here…
After going through the article and the discussion i have made the decision to approach the RACPC in person to get the switching fee and the MCLR+Spread proposal that they will charge for my maxgain home loan product.
The switching fee will be around Rs 16000/- (0.57% of the drawing power) — as per the above article & discussion.
My remaining tenure is 100 month.
My present spread over base rate is 0.05% and the interest rate is standing at 9.3%.
As per SBI site for existing Maxgain buyers having house loan amount less than 75L, the spread is 0.80% over MCLR rate. So the effective rate is 8.80%.
By going through the calculation explained in the article, it has come out that my tenure will be reduced by 95/96 from remaining 100, if i go for the switch. So the saving of around 1,50,000/- at the end of the loan period (which is after 8 years) by the upfront payment of 16000/- as switching charge. With this data the switching seems to be a good idea.
But the point of concern is the higher spread into which the loan will be locked into, if i switch. On the other hand the possibility of ‘no care’ towards the base rate by the SBI in future – as understood from the discussion – is also a matter of concern.so switching is a double edged sword.
Considering the fact that i will be facing another 7 MCLR rate changes till the closure of the loan with the higher spread, I need to be cautious.
Had the spread being same for the normal home loan and the Maxgain product, i would not have this concern.
Moreover after going through the article, my view is that the Maxgain buyers spread should be less than that of normal buyers as the “credit risk profile” of the Maxgain buyers will be less, as the bank is well aware of the financial health by way of Available Balance. I am keeping less hope here, as you have rightly said the reason for such a discriminatory spread in MCLR among normal and Maxgain is purely their decision without any sense.
I will update further here after the meeting with RACPC in this week.
In the meantime i request you to put in your suggestions if time permits.
Thanks & Regards