First of all, I thank to Mr. VKSNathan who gave the idea for this article. (Click here to know the background). Now a days many home loan borrowers are opting a particular type of home loan from SBI which is called Max Gain. In this home loan, an Overdraft (OD) account is assigned to the customer’s home loan & any amount parked by customer is treated as loan repayment for the purpose of interest calculation, for the days, the amount stays there in that OD account. As on date following banks are offering similar types of home loan to their customers.
SBI, IDBI, CITI, HSBC & Standard Chartered. Punjab National Bank can also be added in this list but it’s offering a combo of normal loan + OD. In this article, we are going to discuss only SBI Max Gain as in OD linked home loan, for the fact that the maximum business is with SBI & the most discussed topic on JI forum is also related to SBI Max Gain (click here).
What is an Overdraft account?
Before we discuss Max Gain, first understand, what is an OD account? All of us are well aware of functioning of an ordinary saving bank (SB) account. Here account operates between zero to positive & positive to zero. As we deposit our money, it’s used by bank & we get interest on our money from bank. In case of an OD account, bank first ask for a security & then assign a credit limit on the basis of the market value of that security. This security may be Fixed Deposits, Insurance Policies, National Saving Certificates, Shares, Mutual Fund units, house/commercial property etc. Now when we are using this assigned credit limit, the amount is going from zero to negative zone & when we are repaying, it’s coming from negative to zero. As we are using bank’s money in this case, the interest ‘ll be paid by us to bank. That’s how an OD account works.
So what is the correlation between Max Gain home loan & Over Draft account?
For Max Gain borrowers, SBI opens an Over Draft account where the Credit limit as discussed above is equal to the loan value assigned to the borrower. Here underlying security is the home you have purchased or constructed from that loan amount. Now as & when you are parking any surplus amount into this OD accout, the parked amount is treated as payment towards loan (effectively you are bringing down your loan liability from negative towards zero position) and thus the interest ‘ll be charged only on the difference amount i.e. total loan amount – parked surplus amount.
What is the primary benefit of Max Gain?
Well the primary benefit of MG is to keep your liquidity intact & still bringing down your interest outgo. To understand it better, please imagine a situation you are running a home loan of 30L Rs. & now you do have 2L Rs. with you to prepay. In normal home loan, your 2L Rs. ‘ll be accepted by bank & adjusted towards home loan & your amount is gone forever so no liquidity for you of that 2L Rs. amount. On the other hand, if you are MG customer, simply park those 2L Rs. in your MG account & your interest outgo ‘ll be lower from that month itself till those 2L Rs. or a part of it is there as surplus in MG account.
What is Drawing Power ?
Drawing Power is nothing but your as on date actual outstanding loan amount. Before final disbursal or start of loan repayment, it’s your sanctioned loan amount. Once your EMI starts, it’s your as on date actual outstanding loan amount. Please check Image below, Drawing Power here is 1867053 Rs. as on date. (Click here to understand it better)
What is Available balance?
Before final disbursal, it’s the sum of undisbursed amount + parked surplus & post final disbursal, it’s your parked surplus amount which is available to withdraw. Please check Image below, Available Balance here is 1084177.72 Rs. as on date. (Click here to understand it better)
What is Book balance?
It’s the adjusted loan amount arrived after deducting the Available Balance amount from Drawing Power. In your account statements it’s shown with a negative sign. Please check Image below, Book Balance here is – 782875.28 Rs. as on date. (Click here to understand it better)
Is there any extra interest for Max Gain?
No, the interest for home loan is same in SBI be it for normal home loan or for Max Gain.
I’m an existing SBI home loan customer. Can I convert my old term loan to Max Gain?
Yes, you can. Please contact your loan serving branch or RACPC for the required paperwork to be done. This may be an outdated info so please do check with your loan serving branch for current day rules on conversion.
I have taken the Max Gain for an Under Construction Property. Can I park surplus amount to save on interest outgo?
The answer is yes & no both. Yes you can park your surplus during under construction phase but do remember SBI is disbursing partially at this juncture & in case due to any emergency you want to liquidate your surplus, SBI ‘ll not allow the same. So park only that much surplus, you feel you ‘ll not need even in an extreme emergency.
If I’m parking some money on monthly basis or in lump sum, will my loan term come down or EMI go down?
No. Neither your EMI ‘ll come down nor your loan term. The only saving is in terms of interest outgo. To understand it better, Let’s assume a test case of loan amount 30L Rs. @ 10% Rate of Interest for 20Y term. The normal EMI for these nos. ‘ll be 28951 Rs. The break up of your EMI for first month ‘ll be 25000 Rs. interest & 3951 Rs. for principal repayment.
Now if you do have 2L Rs. surplus in the very first month & prepay the same as below –
Case – 1 Normal home loan
Your 2L Rs. is gone & outstanding loan amount ‘ll come to 2796049 & interest outgo ‘ll still be 25000 Rs. but the no. of months ‘ll come down from original 240 to 198 months.
Case – 2 Max Gain home loan
Your 2L Rs. are parked in that OD account & the interest for the very first month ‘ll be calculated on 28L Rs. & thus it ‘ll be 23334 & thus there‘ll be an interest saving of 1667 Rs. which‘ll remain available in your OD account as surplus along with your parked surplus 2L Rs. so for next month, the parked surplus amount ‘ll be 201667 Rs.
Please do note in case 2 above, Your loan term is still 240 months but the saving of interest ‘ll keep on increasing on mly basis from the parked surplus & of course the liquidity of those 2L Rs. is there.
How can I calculate my saving in Max Gain?
To know your actual saving, first of all please demand a loan amortization schedule from your loan serving branch & now for each month compare the scheduled interest outgo as per your loan amort. schedule & the actual interest outgo.
What should I do to maximize the savings in Max Gain?
If you are paying your EMIs from SBI’s SB account, you can maximize your benefits. How? here it goes. Say 15th is the EMi date on which EMi amount is debited from your SB acct. Now in a normal home loan, people ‘ll keep at least 2-3 months’ EMI amount as buffer in SB account. but in case of Max Gain, you do not need to keep buffer in SB account. Keep this buffer amount also in your MG account along with your routine surplus amount. now use the power of netbanking of SBI for your own good & create a schedule transaction of your EMI amount 28951 Rs. (in the above example) to be transferred on 13th of every month from MG account to SB account. At a time you can schedule for next 12 months by using standard instruction. So it’s technology that’s helping you.
I can transfer money to MG account from my existing netbanking enabled SB account but reverse is not happening. why?
The answer lies in the fact that Netbanking transaction rights on your MG account is not enabled yet by your loan serving branch. if final disbursal is done, you can apply for transaction rights. if only partial disbursement has been done, sorry, you can’t apply for transaction rights till final disbursal.
Is it mandatory to purchase property insurance & life insurance along with Max Gain?
Having property insurance as well as sufficient life insurance is compulsory but purchasing the same from SBI’s sister cos. like SBI General ins. & SBI Life ins. is not at all mandatory. If you feel that policies are being cross sold to you to exploit your position (home loan seeker), please contact the AGM of your local RACPC where your loan application is under processing.
Is SBI charging higher processing fee for Max Gain?
No, as on date there is no differentiation in fee for term loan & Max Gain but SBI reserves the rights to charge different fee.
Can I claim section 80C principal repayment benefit for the surplus amount parked in Max Gain?
The answer is NO. Only the regular principal repaid by you from your EMI as part of your loan amortization schedule is available for tax benefit under section 80C. the parked surplus amount is liquid money & you can withdraw it any time, hence it’s not considered as actual repayment of loan & thus not eligible for tax benefit.
Can I avail cheque book & ATM card for my Max Gain account?
Yes, as & when you‘ll demand these, SBI ‘ll offer you the same. In case you are already holding an SBI SB acct. linked ATM card, you have the option to link your MG acct. also with this existing ATM card.
Can I enroll my MF SIPs in Max Gain?
Yes but do note, there should be a surplus balance i.e. available balance on the date of SIP, else your ECS or SI mandate ‘ll bounce.
Can i pay for my utility bills, credit card payments, online shopping from Max Gain?
Yes, you can do all this & more. In fact it’s in your best interest that you treat your MG account as your primary money parking account & route all your transactions through it so that money is lying there for maximum possible time & thus helping you to bring down your interest outgo.
I used my MG account ATM card to withdraw cash from other bank’s ATM & I was charged the money very first time in the month. Why?
The reason is, as per RBI’s circular 5 transactions on other banks’ ATM are free only for SB account & in this case, you forget the point that your MG account is not SB account. it’s an overdraft account.
For an imaginary situation, my loan amount is 30L Rs. & parked surplus amount is also 30L Rs. Does it mean, my loan is closed & I can claim my property papers from SBI?
No, your loan is not closed. Only interest outgo ‘ll become zero & EMI ‘ll remain continue as it is. Yes the interest part of your EMI ‘ll keep on accumulating in your MG account. If you want to close your loan at this point, you w’d have to inform SBI in written & now SBI ‘ll adjust your parked surplus amount towards the outstanding loan amount. you ‘ll lose the liquidity of your money but loan ‘ll be over & now you can get your property papers back.
How can I transfer my loan from other banks to SBI Max Gain?
For loan transfer, first of all contact your existing lender & ask for following things.
1. Loan Account statement from day one.
2. List of Documents, which were submitted by you at the time of availing original loan. In day to day language of bankers, it’s called LOD.
3. As on date outstanding loan balance with applicable interest, penalty & any other fee to close the loan.
Now contact, the nearest SBI Branch (if you do have an existing SB account with SBI, it’s advisable to contact there for ease of operation). Inform in that branch that you want to transfer your loan from existing bank to SBI Max Gain. fill the application form, submit the necessary papers & SBI’s RACPC ‘ll do the back gorund job.
Once SBI is ready to accept the transfer, it ‘ll issue you a sanction letter of the loan amount & ‘ll ask you to go for loan related agreement documentation work with SBI. If you are not having property insurance, SBI may ask to purchase one. Same ‘ll be the case for your life insurance. Once legal documentation is over, the cheque of the loan balance ‘ll be issued directly into the name of the bank in question. After the amount is credited to your existing bank, within next 20-30 days, you ‘ll get the original documents submitted by you, from the existing bank. Now you w’d have to submit these documents to SBI. In some states like Gujarat, Maharashtra, Karnataka, SBI may ask to go for registration of mortgage deed on your property in the office where your property was originally registered in your name.
Comparison of SBI Max Gain to Normal Home loan
|
SBI Max Gain |
Normal Home Loan |
|
Liquidity of your part prepayments is there |
No Liquidity. Money is gone for ever, once you prepay. |
|
A bit complex to understand |
Easy to understand |
|
For people who can generate regular surplus amounts |
For people who can only manage regular EMIs |
Click here to know the real life example of Mr. Sudhir S for SBI Max Gain
Do you feel, this article was able to answer your all queries related to SBI Max Gain? Was this article helpful for you to understand the overall concept of SBI Max Gain home loan? Please feel free to ask for more help.
Asan Ideas for Wealth 
Thanks for the wonderful information you have provided in this article. I really helped me to clarify few doubts 🙂
Though i have one below question :
1. In SBI Max gain loan, EMI for a particular month gets credited to the account and at last day of every month, the interest component gets debited. But in this case EMI amount will be constant? And also how the interest which gets debited at the end of the month is calculated?
On the EMI credit date, the Principal part of your EMI is adjusted towards loan and your DP comes down. On the last day of the month, interest is calculated on daily BB and charged to your Max Gain account.
Thanks
Hi Ashal,
Yes I have noticed that my drawing power is not reducing. Should it be actually reducing as the principle gets deducted every month?
The surplus is just equal to my EMI which I remove after the EMI gets deposited to my Max Gain account.
Dear Sushant, your Drawing Power should come down with every passing month. Please contact your loan serving branch to report the matter. Although you are not losing anything in terms of Interest outgo on the loan but yes, the Drawing Power should come down every month.
Thanks
Ashal
Hi Ashal,
Please refer the below details:
Book Balance 28,271.57
Available Balance 24,41,149.57
Limit 24,12,878.00
Uncleared balance 0
Drawing Power 24,12,878.00
Currency INR
Rate of Interest (% p.a.) 8.35%
For the last few months my Available Balance is more than the Drawing power.
However, I have observed that my Drawing power is remaining same and not changing for the last few months. Shouldn’t it be reducing every month as the principle amount gets deducted every month when my EMI gets deposited in the account?
Is this a right understanding or am I missing something here?
Your help is much appreciated.
Dear Sushant, do you mean to say, your Drawing power is not changing from 2412878 for last 4-5 months?
On a different note, positive book balance indicates you have more money than the loan value itself. Please remove that extra money as it’s not earning any interest for you and can be used/deployed elsewhere.
Thanks
Ashal
Hi, If the surplus amount in OD account is deceasing the monthly interest then resulting EMI term should also decrease. Isn’t it ? Because decrease in interest eventually results in increase in per month principal amount payment hence the loan repayment should complete sooner than original decided term.
Dear Sanjeev, Please reread the article. The Max Gain or should I say OVER DRAFT home loan products don’t offer Term reduction. Yes, by parking more and more money into Max Gain, your interest outgo is coming down with every passing day. That’s your benefit.
Thanks
Ashal
Really Good Article.
Rgds
Sachin
Thanks
Hi Ashal,
I have SBI MAXGAIN loan. I want to max out my tax deduction on principal payment and approached the current bank manager to pre-pay the amount and considered it for Principal payment.The new Bank manager says it will be not considered as Principay payment under the system. Earlier managers ( it was SBH then) used to reduce my Drawing balance and available balance and give provisional statement for tax purposes. Please let me know how to explain to the current bank manager.
Please ask your branch manager to adjust a sum from AB towards DP permanently. This way, you’ll lose the liquidity of the money but the amount ‘ll be considered for 80C calculation.
Thanks
Ashal
Hi Ashal, Its a nice article. Can you please help me for my SBI MG Home Loan Account. It says account type as OD account as you explained.It shows below details:
Sanctioned Limit: Rs. 13,95,000
Available Balance: Rs. 39,688
Does it say that My Principal amount = Sanctioned Limit. And I can withdraw available balance?
This Loan account is linked to my SBI Joint Savings account and from this account only, EMI gets debited. I have saved Rs. 14 lakh in my linked savings account.
Should I close my Loan now? How can I get this closed online? Thanks.
Dear Sharad, parking of surplus fund in your joint saving account is not giving you the desired benefit. The said surplus amount should be parked in the OD account. Then only you ‘ll save on interest outgo. For better understanding of Max Gain, you may check my 2 YOUTUBE videos.
Thanks
Ashal
Hi,
Thank you for wonderful information.
I am trying to do backward calculation of principal, interest, interest-saved on my maxgain account (RACPC, Shankar Seth, Pune did not reduce my drawing power from Jul-2014. Being out of India didn’t help either. Story for another day).
It seems likely monthly interest rate calculation is not simply (1/12) of interest rate.
Can you tell me if number of days in month matter? Does year is counted as 360 or 365 days? (In finance terms – is it Act/360 or Act/365 or 30/360 etc. in interest rate calculation).
Thank you for kind attention.
The no. of days in a month matters as the interest is charged on daily reducing balance. The interest is not flat 1/12th but 1/365 for every day.
Thanks
Ashal
Hi Ashal,
From where can I get amortization schedule ? I talked to my loan serving branch and they don’t have any clue about it. Will I get it from RACPC center ?
The loan amortization schedule is to be provided by your branch itself. If the people there don’t have an idea, complain to RACPC.
Hi,
Thanks for nice article. I have taken SBI Max gain loan and I have parked around 3 lakh in my OD account now i need to transfer to my savings account, but when I tried to transfer the amount from OD to savings there is no option available in internet banking.
Here I am confused how exactly I can transfer the amount from OD to savings bank account, is only the cheque is available option, please suggest me.
Regards
Anand
Did you get maxgain transaction rights from your loan serving branch? Once you get the transaction rights, you should see the option in fund transfer as debit account as OD account i.e. loan account. Ideally once all loan amount is disbursed and the property is registered, you should go to RACPC branch and they should give you one form (don’t remember the name), that you need to show in loan serving branch, and write an application to give you transaction rights. With in 1/2 days you should see OD account as debit account in fund transfer page.
Dear sir,
I have saving account in sbi and i am planning for home loan.
I have two questions regarding sbi maxgain home loan, which i am planning for my new home.
1. Is Pradhan mantri aavas yojana subsidy applicable in sbi maxgain home loan for mid income group (6-12lakh income) first time home buyers.
2. In Sbi maxgain how interest will calculate during under construction time.
Suppose during under construction first disbursement 6lakh given by bank and suppose i have 5 lakh already surplus in my OD loan account, in this case sbi maxgain will first interest on 6lakh will take from my side and then from that interest taken by sbi over 6lakh interest of 5lakh will be added in my OD account. Is this assumption is correct. Or sbi will ask for interest only over 6-5=1lakh. Which case is correct.
3. For Sbi maxgain home loan if i have taken pre-emi option, means only intrest will be pay during possession, so in this case can i put surplus money in loan account which i get meantime and get interest saving accordingly. If yes, is there any limit during under construction stage for surplus money to be add or no of time money will be add.
Regards,
Atul Jagtap
Dear Atul, SBI is not offering max gain for loans less than 20L now a days. But Interest subsidy is available.
Interest ll be charged only on 1L for your given example.
As of today, if I have X amount in Closing Balance which will get all paid in about 3 months. I am getting sms from Bank for Available balance of Y amount. Does that mean Y is the surplus amount which can be withdrawn even after loan is closed in 3 months.
If Y is greater than X, you are eligible for X-Y as surplus amount to be available post loan closure.
Thanks
Ashal
Hi,
If we do any transcation,transfer money from my max gain aacount to any other bank(net banking).Will there be any commission on each transcation through net banking?Please let me know.
The usual charges for IMPS/NEFT/RTGS ll be there.
Hello Ashal
This article really seems like great education kit for all SBI Maxgain home loan account holders.
My query here is, how could i know how much i saved/ earned by parking money in maxgain account. is there any way for that.
Dear Rajesh, yes you can do it by checking the Google sheet created and shared here by dear Shrikant Bilurkar in Aug 2013. Please check his comment below.
You can also check my two YouTube videos on SBI Max Gain.
Thanks
Ashsl
Hi, I have taken Max Gain loan from SBI and the first owner is my wife. Currently, she does not hold any SBI account whereas I have an SBI account and EMI gets deducted from the same. My question is,
1. Does my wife need to open an SBI account to avail Max Gain benefits or co-owners accounts also works?
2. Does SBI create an account at the time of loan processing or the customer needs to apply for new OD account in SBI?
Your reply will help me a lot just like your post did.
Thanks
Anand
Dear Anand, as your wife is co-owner as well as co-applicant, she is eligible for tax benefit on loan. To pay her share of EMI, she can transfer money from other bank account to your SBI SB account. No need to open new SB account for her. SBI ‘ll open the OD account automatically.
Thanks
Ashal
Hi Ashal,
Currently I am having a home loan with AXIS bank. After MCLR Axis is charging 8.70% and SBI Max gain charges 8.80%. Still it is beneficial to go with SBI Max Gain???
Dear Sachin, that’s your personal call.
Thanks
Ashal
Hi This one is very nice article about SBI Max Gain…
I have two queries:
1 I took home loan in Aug 2016 and rate was 9.45 which is shown as 9.40 in online banking…Now the rate have been reduced but still there is no change in the rate.What to do.
2 Me n my are joint holders in the property and OD account .We opened a savings account on either or survivor basis.Now my wife has issued a cheque with her signature only from the OD account’s chequebook.Will that require my signature also or anyone can sign on the cheque?We are not sure as OD account was opened by the RACPC.Please guide
Dear Umesh, relax. Your loan is already linked with MCLR and in August 2017, you ‘ll get new Rate automatically. Any one of you can sign cheque and it’s valid.
Thanks
Ashal
Dear Ashal,
If my SBI Max Gain (MG) homeloan is for 30L and i park my sirplus amount of 30L there, what happens when my regular EMI amount of Rs 30,000 goes to SBI maxgain a/c by ECS, will SBI reject this EMI by ECS ? or will SBI pay me interest on this sirplus Rs30,000
Thanks
Dear Tapan, SBI ‘ll not reject EMI. You ‘ll not earn any interest on extra amount. It’s in your own interest to remove the surplus amount immediately through netbanking.
Thanks
Ashal
Hi Ashal,
With the change in interest rare through MCLR , is this worth to switch over ? for my loan ROI is 9.40%. If I change over it will become 8.80% considering I am opting for 1 year review period. Not sure bank charges any amount o switch over. Though I see the difference does it help us on long term basis ?
Please wait for Feb MCLR and switch after that. Yes, you w’d have to pay a switch over fee.
Thanks
Ashal
Is it right to wait for Feb MCLR?
To my understanding, once we switch to MCLR by paying a switch-over fee, your spread gets locked. – Please correct me if I am wrong!
SBI lowered MCLR but increased the spread on Jan 1st.
Eg.,
MCLR and spread before 1st Jan – 9, 0.25
MCLR and spread after 1st Jan – 8, 0.65
Hypothetical MCLR next year = 7.5
if I had switched to MCLR before Jan 1st my interest rate would be 9.25 but would reduce to 7.75
If I switch to MCLR now, my interest rate for one year would be 8.65 but change to 8.15
If we wait till february we may benefit for this year if interest rate reduces, but what is the guarantee that spread is not increased further?
Dear Srikar, if you feel, waiting may prove costly to you, please feel free to switch now.
Thanks
Ashal
Hi Ashal,
I am holding a SBI Max gain home loan account and i see that the interest is not decreasing every month. Below is the snippet:
Value Date Description Ref No./Cheque No. Debit Credit Balance
5-Jan-16 BULK POSTING-BY SALARY– 31,094.00 -29,68,669.00
31-Jan-16 DEBIT INTEREST— 23,732.00 -29,92,401.00
5-Feb-16 BULK POSTING-BY SALARY– 31,094.00 -29,61,307.00
29-Feb-16 DEBIT INTEREST— 22,149.00 -29,83,456.00
5-Mar-16 BULK POSTING-BY SALARY– 31,094.00 -29,52,362.00
31-Mar-16 DEBIT INTEREST— 23,602.00 -29,75,964.00
5-Apr-16 BULK POSTING-BY SALARY– 31,094.00 -29,44,870.00
30-Apr-16 DEBIT INTEREST— 22,784.00 -29,67,654.00
5-May-16 BULK POSTING-BY SALARY– 31,094.00 -29,36,560.00
31-May-16 DEBIT INTEREST— 23,476.00 -29,60,036.00
6-Jun-16 BULK POSTING-BY SALARY– 31,094.00 -29,28,942.00
30-Jun-16 DEBIT INTEREST— 22,669.00 -29,51,611.00
5-Jul-16 BULK POSTING-BY SALARY– 31,094.00 -29,20,517.00
31-Jul-16 DEBIT INTEREST— 23,348.00 -29,43,865.00
5-Aug-16 BULK POSTING-BY SALARY– 31,094.00 -29,12,771.00
31-Aug-16 DEBIT INTEREST— 23,286.00 -29,36,057.00
6-Sep-16 BULK POSTING-BY SALARY– 31,094.00 -29,04,963.00
30-Sep-16 DEBIT INTEREST— 22,484.00 -29,27,447.00
I do not understand why interest repayment is varying every month from and 23K to 22K and back to 23K.
In above period I have not parked /withdrawn any amount.
Can you help please? If this is normal in sbi max gain accounts?
31094 is my EMI on 5th of every month.
Dear Ankit, look closely, your interest is actually coming down. In jan 16, it was 23732 and in Aug 16, it’s 23286. Please look into the interest debit months and the no. of days in that month. Jan, Mar, May, Jul and Aug are having 23K+ interest on 31 days in these months. Other months are having just 30 days, hence lesser interest.
Thanks
Ashal
Hi Ashal,
I have one more questions related to amortization principal calculation with MG. I know they are calculating interest on daily basis. But are they using same method during their amortization schedule as well ? or they will go with monthly basis.
say for 30L with interest a rate of 10%, when calculating for month of Jan (consider previous closing amount as 30L)
which method are they using to calculating principal part in amortization schedule
method 1 : EMI – 30L *10/12/100
method 2 : EMI – 30L*10*31/100/365
(subtracting interest part from EMI. Method 1 use monthly and method 2 use daily interest calculation )
Appreciate your help here.
Dear Anoop, it’s daily reducing interest calculation in SBI.
Thanks
Ashal
Dear Ashal,
So the principal will calculate using method 2 above, correct ?
Yes.
Thanks Ashal
Hi Ashal,
will you able to provide me a sample amortization schedule if you have, I will drop an email to you .
thanks
Anoop
Dear Anoop, the loan amortization schedule – a google sheet is shared by one reader in below comments – named as Srikant Bilurkar.
Thanks
Ashal
Hi Ashal,
Thanks for the spreadsheet details. I found that the interest calculation on that sheet very interesting. take imaginary values as
Loan amount :30L
ROI :10
EMI : 40000
EMI date :5th
The sheet calculating interest like below for month of Jan
(3000000 × 10× 31)/36500 – (40000 × 10 × 27)/36500
From this what I understood is calculate daily interest on opening balance, then calculate interest on EMI amount starting from EMI date to end date and reduce this value from first.
Am I correct here ?
Dear Anoop, the interest is calculated on daily book balance. Once EMI is credited, the interest part of EMI becomes available balance and thus book balance is reduced and hence less interest till last day of month.
Thanks
Ashal
Hi Ashal,
Yes, that I totally understood and that is why I asked the question. If you check amortisation calculation on the excel you have mentioned, it is reducing total EMI interest from previous BB interest. But we have to deduct principal part from emi and then calculate interest.
So do you think that excel calculation is correct. Can you please verify the same with an official amortisation sheet from SBI ? If you have any please send it to me so that I can verify
Hi Ashal,
Thanks for you reply to my previous post. I am trying to do some math here and can you tell me if my below understanding is correct.
Suppose, my loan amount is 30,00,000 and EMI is 30,000 out of which interest is 25,000 and principal is 5000. EMI date is 5th.
Now, consider month of Jan. On Jan first my DP is 30,00,000. Jan 5th, my EMI will credit to the OD. So upon EMI credit my AB will be 30,000. principal part will be deduct on same day from AB.
At end of Jan 5th,
DP = 30,00,000 – 5000 = 29,95,000
AB = 25000
BB = 29,95,000 – 25000 = 2970000.
Will interest calculate on this BB 2970000 for next 26 days or will it calculate on 29,95,000 ? (After deducting principal )
Can you tell me what will be my DP, BB,AB on Jan 6th (Consider I am not depositing any amount as surplus) if above calculation is not correct ?
Once again thank you for all your help here
Regards,
Anoop
Dear Anoop, yes from 5th to 31st Jan, interest is calculated on 2995000 – AB = 2970000.
Thanks
Ashal
Thanks Ashal
Dear Ashal,
So in MG choosing an early EMI date will help us save more interest . Because the interest part of EMI will available in AB for days. Selecting EMI date as 5th will helps to save more interest than selecting EMI date as 10th. Am I correct ?
Dear Anoop, yes, having an early EMI credit date ‘ll result in more saving.
Thanks
Ashal
CAN EMI IN MAXGAIN LOAN ACCOUNT BE CHANGED, IN ORDER TO TAKE THE MAXIMUM BENEFIT OF PRINCIPAL AMOUNT EXEMPTION UNDER 80 C . AS SURPLUS PARKED IN MAX GAIN ACCOUNT DOES NOT PROVIDE ANY BENEFIT OF PRINCIPAL PAYMENT
Dear Tanuj, Yes, you can change your EMI. Please contact your loan serving branch to increase your EMI.
Thanks
Ashal
Hello Ashal, I learnt that for Maxgain changing emi do not affect principal as it is fixed based on loan term and goes per amortization unless we totally modify tenure on paper.
also any inputs on having excess surplus how to adjust drawing power in small chunks permanently. any minimum rules or limits for the same on max gain?
Dear Sandeep, to get the effect of Higher EMI, you need to contact your loan serving branch for change in loan amortization schedule.
Once your AB = DP, just start transferring your EMI from maxgain on credit date itself, to keep book balance zero.
Thanks
Ashal
Hi Ashal .
My Maxgain account is taken based on base Rate . Now I read that interest rate calculation is based on MLCR . I see that the interest rate in my account is not changed for past one year (still at 9.4) .
Will the old home loans get the benefit of the rate cuts ?
Thanks
Ajay
Dear Ajay, to get the benefit of MCLR, you need to apply for linking to MCLR instead of base rate.
Thanks
Ashal
Hi Ashal ,
I have a max Gain Loan taken 3 years back . After the interest rate regime has moved to MCLR calculation , I see that interest rate has not changed for my account . (at 9.4 % now)
Could you guide on what needs to be done to get the interest rate reduced ? For the pre MCLR home loans , how is the interest rate reduction transferred to the customers?
Thanks in advance for your reply .
Dear Ajay, please contact your loan serving branch to get the conversion from base rate to MCLR.
Thanks
Ashal
Hi,
Last month i transfer 100000 rs from my saving account to my home loan account. But only 89420 rs credited in my home loan account and other amount credited in maxgain suraksha account.
I checked today my maxgain account. Here 10781 rs debited and it’s transfer to cash management product.
What is this cash management product and why they are debited.
Please help me.
Suraksha account meant for home loan linked term plan, whose prem. is paid as part of your home loan. To keep the matter simple, pay off the Suraksha amount in full to save on interest outgo towards prem.payment under loan.
Thanks
Ashal
Hi Ashal,
I parked 2.1L.
31-Aug-2016 DEBIT INTEREST 45,466.00
29-Aug-2016 BY TRANSFER 2,00,000.00
25-Aug-2016 BY TRANSFER 1,000.00
11-Aug-2016 BULK POSTING BY SALARY 67,546.00
Available Balance is 1,63,496.00.
Why is my AB less than 2,00,000? It was approx 28,000 before I transferred the 2,10,000.
Thanks,
ST.
The AB is less on account of Interest payment (debit).
Thanks
Ashal
I have a question, I had maxgain home loan account for which I have prepaid the money. I have taken this home loan in join accout with my wife. While closing the home loan, branch manager told me that we both need to come for termination of the agreement. As we are not in the same city, it would be difficult for both of us to in home branch. Is there a way that we can close our loan from other branch or my wife can give me a power of attorney.
Dear Sandeep, loan closure does require signature of both applicants, hence presence of both is required. For Power of Attorney thing, please cross check with your loan serving branch.
Thanks
Ashal
Hi Ashal,
Thanks for the wonderful article which provides great insights and helps us all out with our SBI max gain accounts.
I have been having loan thru the SBI MaxGain since June 2015, and all my EMI’s were deducted from my SB account with SBI on 09th of each month, however, EMI deduction did not happen today for some reason.
My savings acount has enough balance for deduction of the EMI though.
Can you please suggest further course of action that i adopt now ??
Thanks in advance.
Regards
Dear Anuj, Please contact your loan serving branch.
Thanks
Ashal
Hi Ashal, Very good article. Below is the status of my SBI MG HL account. (My Actual Loan amount was 17L, I prepayed some and below is the present status).Now I am paying 21K as EMI every month. If my AB = DP, I have to continue my EMIs ryt ? So everymonth emi 21K i will pay and the same 21k will come to AB ? so that i can take that 21 k?
Account Number 000000XXXX
Description SBI H L MAXGAIN OD (APR15)
Name XXXX
Book Balance -8,15,169.00
Available Balance 2,70,620.00
Limit 10,85,789.00
Uncleared balance 0.00
Drawing Power 10,85,789.00
Currency INR
Rate of Interest (% p.a.) 9.35%
Lien Amount 0.00
As per your account data above, you need to park 8.15169 Rs. more as on date to keep that EMI withdrawal thing going.
Thanks
Ashal
Dear Sundar, yes, once your book balance is zero which is DP = AB, you can do that EMI removal thing.
Thanks
Ashal
Hi,
A very helpful article with perfect illustrations.
Previously I had taken “Smart Home Loan” from HSBC and “Home Saver Loan” from Standard Chartered Bank.
Both of them worked exactly in the way you have explained here.
Recently I had to take a loan from Canara Bank and later got it transferred to Citibank.
The name of the loan I have taken in Citibank is “Citibank Home Credit Fast Track”.
I am feeling that, this is working in slightly different way.
They have given me a Current Account and the EMI gets deducted from the amount parked in this account. They told that, the threshold is Rs.1 Lakh and the extra amount is transferred to OD account – the outstanding will come down by that much.
So, I transferred Rs.3 Lakh to this account. In my transactions, I see that, Rs. 2 Lakh got debited and transferred to OD account on the same day.
But, in my account login, I don’t see the OD account at all!!
So, I am confused.
Do you have any info on this? It will be great if you can write similar article for Citibank account also.
Also, they have one more loan called “Citibank Home Credit Vanilla”, which also has OD facility and interest saver.
You can include this also in your article and compare all this with SBI Max Gain.
Thanks,
Narendra
Please contact Citibank to get access to OD account under same login id.
Thanks
Ashal
Dear Ashal,
From the SBI Maxgain Acct statement from the bank website, debit of monthly interest is visible as a monthly entry on the last day of the month. Overall reduction in Principal (till today) can be calculated from the current Drawing Power. How can we calculate / know the amounts of monthly principal paid back (for every previous month) from the account statement?
Thanks in advance.
-Navneet
Dear Navneet, you need to download mly statement or keep track of your drawing power before and after emi credit.
Thanks
Ashal
Ashal, does drawing power (principal) change is updated on emi date or end of month ?
Dear Sandeep, the DP is changed on EMI date.
Thanks
Ashal
Dear,
I have a max gain account since 2013. Now I have parked sufficient funds in it so that the book balance is now positive. Do I still have to maintain amount for EMI in other account from where it gets debit. I plan to keep the amount parked permanently and don’t intend to withdraw.
Dear Babar, Yes. You need to keep the balance in EMI debit account. Once EMI is credited to your Max Gain account, you can immediately transfer it back to any other account of your choice.
Thanks
Ashal
Hi Ashal,
Nice to read this blog and seeing your sound advices. I took a SBI Max gain account in 2014 with 50L loan approval for an under construction flat. I am yet to get the possession which is due this dec, 2016. Till now around 35L amount has been disbursed to the builder and the pending 15L will be enough to make 100% payment for the flat. Now i am in need of another 12L for interior work, for which I need your advice to see which option is feasible –
Want to apply an advance loan from my Provident Fund account to partly repay the home loan ( have sufficient fund for 12L ) and i already completed 10 years of service contributing to PF.
Option 1 : Can I withdraw this money post 100% loan disbursal to builder and possession since it is an OD (Maxgain account ) ?
If yes Post 100% loan amount disbursal how much more days will it take for me to be able to withdraw any surplus parked money from my max gain account ?
Option 2: If withdrawal doesn’t work post possession as well for the PF transferred money. Then should i go for a Top Up loan from SBI again for 12L. How much long process will it take and will the interest rates be higher than my home loan interest rate ?
Assumption taken PF advance will be paid directly to SBI loan account only ( and not to my personal account ) since home loan account is active. If there any other options as well please let me know.
Dear Sarath, Contact SBI for top up loan.
Thanks
Ashal
Hi Ashal,
I have sent you an email for some confusion on my Maxgain loan with attachments. Please advice me on the same.
Thanks,
Peeyush
Dear Peeyush, Replied your mail.
Thanks
Ashal
Hi Ashal,
Can you clarify the following
1) can I withdraw the total amount from available balance(which includes interest accrued on surplus amount deposited) at any point Or am I
entitled to withdraw only the surplus amount I deposit ?
2) Assume my total tenure is 10yrs and i have added some surplus amount to my OD account which made my book balance zero at the end of 5th year.
If the book balance is zero, ideally the EMI will not have any interest component. In that case, what happens to the EMIs that I pay from 6th year
to 10th year (till account closure time)? what will be my available balance at the end of 10th year and can I withdraw
total available balance on liquidation date and collect my registration papers?
3) Am I still allowed to add surplus amount to the OD account though my book balance is zero? In this case, what happens to the interest acrued on
surplus amount?
4) I will ensure that I always maintain surplus amount in my OD account. So can I opt for EMI deductions from my maxgain OD account iself ?
Dear Ashok, the answers for your queries.
1. You can withdraw, full Available balance.
2. EMI ‘ll run as it is, the interest part of EMI ‘ll be added over and above in existing AB and thus you need to withdraw immediately, to keep your BB zero. Else your BB ‘ll also become positive.
3. Once your BB is zero, you should not add more money as positive BB ‘ll not earn any interest for you unlike a SB account.
4. NO. EMI deduction can happen from SB account only.
Thanks
Ashal
Dear Sir, I have missed my this month(May) EMI – occuring on every month 5th – since my saving account did not had sufficient balance. I have noticed this today only.
1. Please let me know how to repay this EMI.
2. Today, I have transferred EMI amount from SB account to Maxgain account. Is it take care of this missed EMI or I have to visit branch for the same. (Pl. note that I am staying in Mumbai and Maxgain account branch is in Pune).
Kindly advise.
Dear Rajendra, relax. Please contact Pune Branch over phone to get the adjustment of principal amount from the amount parked by you late.
Thanks
Ashal
Hello Ashal,
SBI issues final interest certificate at the end of FY. When I checked the total of principal payments made till date (from the starting of EMI), it doesn’t matches with present Drawing power.
Could you please guide on this issue.
Thanks in advance.
Ajit
Dear Ajit, please contact your loan serving branch.
Thanks
Ashal
Hi,
I have taken a maxgain loan and have got some amount already disbursed. (20L out of 50L loan amount).
I am already paying EMI on it.
My question is –
Q1 – I am from Karnataka. During the property registration, If I want to add my wife as co-owner, do I necessarily need to add her name in the loan co-borrower as well?
Q2 – If yes, then what all are the documents needed to get my wife added as a co-borrower the SBI max-gain loan. As I am recently married, I don’t have my marriage certificate ready yet. Wedding card and photos are there.
Q3 – If I add her as co-borrower and in registration if add keep her as primary co-owner, will I get inetrest rate relaxation now?
Thanks in advance.
Dear Manish, here are the answers.
1.Yes
2. Her KYC docs.
3. There are only co-owners in property unlike bank accounts or demat accounts, where the concept is of primary and secondary owner.
Thanks
Ashal
Hi Ashal.
Since SBI does not issue a debit card for max gain can I link my savings account debit card with the OD account?
If yes what is the procedure for the same and what option should I use while withdrawing money or for merchant payments.
Dear Sushant, please contact your loan serving branch for the same.
Thanks
Hi Ashal,
Bank associates said that this cannot be done since Maxgain does not have ATM facility.
Is this information true? If not how do I escalate this issue and get my debit card linked to my Maxgain account?
Thanking you in advance.
Sushant
Dear Sushant, earlier ATM was offered but now, SBI has withdrawn it. It seems, as many other people are complaining the same issue.
Thanks
Ashal
Hello Ashal,
Is there any limit on amount we can withdraw from OD account? How frequent we can transact from OD account?
Thanks.
Dear Mahesh, your available balance is your limit to withdraw. You can do any no. of transaction in a day or week or month, just like you do in your SB account.
Thanks
Ashal
Hi Ashal !
Thanks for Informative articles due to which finally i shifted my Loan from HDFC to SBI .. few Questions :
1. How long does it take for OD A/C to be reflected @ SBI online
2. Will I Get ATM card / cheque Book for OD A/C ; if yes from whom should i take it —– My SB branch & RACPC branch are different !
3. My EMI will be debited from my ICICI A/C — as told by loan office — then where does SBI SB A/C comes in picture
Dear MMsingh, here are answers.
1. If your OD account has been created, it’ll be reflected immediately in your existing netbanking.
2. You can link existing SB account’s ATM card. Yews, you ‘ll get separate cheque book for OD account.
3. You need to ask to SBI to get the EMI debited from your SBI SB account. If EMI is not happening from there, your SBI SB is not in picture.
Thanks
Ashal
Hi,
If I take loan of 10L and at any given point of time park 11L in the account. Will I get any interest in 1L surplus fund?
-Regards
atul
Dear Atul, no, you ‘ll not earn any interest on this extra 1L amount.
Thanks
Ashal
Question: If the savings account from which EMI is automatically taken has less balance on an EMI date, do they take the EMI from overdraft balance automatically? If not, can that be set up? That can be a good insurance for not missing EMIs. Thanks.
Dear Sanjay, this ‘ll be counted as EMI bounced. To avoid this, you need to set up EMI amount 2-3 days before, getting credited from OD account to SB itself, through SBI netbanking.
Thanks
Ashal
Hi Ashal,
Thanks for this article. I have a doubt, recently I transferred my homeloan from a private bank to SBI and today I visited the branch to get transaction rights and to apply for cheque book and debit card. The staff in the branch said that now SBI is not issuing debit card for maxgain loans, is it true? Also as a trial I moved some fund to OD account, though the amount got credited in the account, the balance is showing as zero. Any clue why it so..?
Dear George, yes, new accounts are not offered debit cards. Please send me your account statement in exl. sheet.
Thanks
Ashal
Hi Ashal
I have some queries regarding full disbursed MG account:
(1) I have applied jointly for loan with first applicant my wife; a housewife, but only wife name is displaying in the OD account. Can I get the benefit of tax rebate on home loan?
(2) We have applied for 20 lakhs but final disbursement was only 189228, but still in OD showing available balance 107712. In which amount EMI payment will be done?
(3) How to get online access to transfer of money from OD to other saving account?
(4) One more account listed in my wife’s online saving account Max gain suraksha, where Limit-48780, Drawing power-9756, rate of interest -10.3% and outstanding amount -9756 is displaying. Is it insurance premium account?
Please clarify the above details.
Thanks & regards
hemant
Dear Hemant, here are the answers to your queries.
1. Yes, you can, if you are also the co-owner of the property in question.
2. EMI ‘ll be same like 20L loan amount but you ‘ll be paying less interest as disbursed amount is less than 20L.
3. Please contact the loan serving branch.
4. Yes, it’s insurance prem. account.
Thanks
Ashal
Thank u very much for your clarifications.
Can you help me to guide for the following issues:
(1) Bank issued Home loan Suraksha insurance in the name of my wife in place of my name. Bank told, we will cancelled it after one month and you can take term insurance which is linked with home loan. How it will affect me in term of benefits? It is a fault of bank, can I reclaim the deducted premium amount?
(2) EMI deduction to be done from SB account or OD account? How can link the OD with SB so it get sufficient balance from OD just before the date of EMI deduction?
(3) In the OD account, only first applicant name can be display? How can I add my name into the OD account so it can display?
Thanks & Regards
Hemant
Dear Hemant,
1. Cancel now. Don’t wait for 1 month.
2. EMI ‘ll be debited from SB account. Through netbanking. The SB account and OD account under a common login ID should be there.
3. Joint applicant’s name remains there in records, no reason to worry.
Thanks
Ashal
Dear Shri Ashalanshu
I have requested in written to cancel my insurance on 6th Feb at RACPC but still it is active. When I complained then bank official replied that we can not do anything till sbi life returned back the cheque.
In between time there is deduction of interest on paid premium showing in the account. When I contacted with SBI life they confirm me that he sent the cheque.
My question are
(1) How can get the extra debited amount of interest?
(2) Can I linked ICICI term insurance with this home loan?
(3) I got one letter from SBI to take properties insurance which having about 16500 one time premium. Is it mandatory to buy the properties insurance ?
Thanks & Regards
H V Sharan
Dear Hemant, where is the cheque amount? As the prem. has been paid by SBI as part of loan and still the money is not repaid, interest is due validly.
Thanks
Ashal
Hi Ashal, I want to know how to reach out to you via email. Have a basic query on life insurance as well as SBI max gain account.
Thanks Karthik
Dear Karthik, please check your inbox.
Thanks
Ashal
Hi Ashal,
Thanks for the detailed information.
I would like to clarify two points here.
1. Does the interest calculated on monthly basis or daily basis ?
consider the case 2 you have mentioned above.In that case after parking 2L, the EMI reduced to 23334 (considering 28L as outstanding). But does the date which I deposit 2L matter here ? Suppose If I park this amount on 21st of a month, how the interest will be calculated ? is it like for 30L for 20 days (1 to 20) and 28L for 10 days ?(21 to 31) ?. If I park another 1 L on 25th of same amount the calculation change like below ?
1 to 20th – 30L
21st to 24th – 28L
25th to 31st – 27L ?
2. When OD=AB, how the calculation changes ? As per the explanation, there is no change in tenure of EMI amount. Take a scenario , we have an amount 2L and now OD=AB and remaining months in tenure is 10 months.
In this case does EMI will be same as earlier ? In that case for all the remaining 10 months, interest deducting from me will be available in AB. does this correct ? that means bank is actually taking interest through my EMI and deposing it to AB?
Appreciate your help here. I am planning to move my home loan to SBI and I am trying to understand it ?
Dear Anoop, here are the answers.
1. Interest is calculated on daily basis.
2. Once your AB=DP, BB is zero, your loan is running now on zero interest rate. On the date of EMI credit, yu can immediately remove the excess money from account to make BB zero.
Thanks
Ashal
I and my wife had taken a joint SBI Max Gain Home Loan. This was about 1.5 years back and then suddenly yesterday I can see the following against my OD account
– a transaction of 40K against for premium against SBI General
I don’t understand what this is about. Could somebody help?
Dear Sriram, this is the property insurance prem. bundled with your home loan.
Thanks
Ashal
I have missed my EMI – occuring on 10 Dec 2015 – since my saving account did not had sufficient balance.
What do i need to do now ?
Dear Anand, don’t worry, please pay the EMI now along with the extra amount for the interest on interest to be charged from you for 2 months.
Thanks
Ashal
Hi Ashal,
I have missed my EMI of my Maxgain Home Loan to be paid on 10th April, as I didn’t have enough funds. After calling SBI customer care they told me that I will have to go to branch to do the missed EMI
I wanted to know
1. Some banks initiate the EMI transfer next day if EMI date is missed, does SBI do it as well?
2. if I transfer it today, 11th April manually through netbanking, will it be considered as payment towards EMI, or it would be considered as surplus amount parked?
3. Also, are you aware of the charges need to be paid for missed EMIs?
Thanks in advance,
Dear Charudatta, relax. Please use NEFT and transfer your EMI today from SB account to Max Gain account. In case, you are still short of money, please transfer as and when you are ready with the money.
Thanks
Ashal
Hi Ashal,
I think there is an issue with how my MaxGain has been setup. Can you please check?
Book Balance -62,18,463.50
Available Balance 1,81,536.50
Limit 64,00,000.00
Uncleared balance 0.00
Drawing Power 64,00,000.00
Lien Amount 0.00
Loan Sanctioned – Aug 2015 (fully disbursed for loan amount of 64 Lakhs in Aug 2015)
The apartment is a secondary sale – so there was no part payment / disbursement involved. I have been paying full EMI payments from Sep 2015 (Rs. 61,005.00).
Every month, there are two transactions that I see – EMI amount is credited to the OD account on the 5th of every month. On the last day of the amount, there is a debit for the outstanding interest amount.
I see no debits towards principal. I think it is also reflected in the Drawing Power. Is there an issue in the way my account is setup?
Dear sriram, please contact loan serving branch and ask there for any Moratorium if any. it seems you have availed loan under Yuva category or SBI staff has put it that way and that’s how a moratorium is there. Due to this Moratorium, your principal is not getting adjusted.
Thanks
Ashal
Thanks Ashal – will do. Happy New Year!
Hi Ashal,
My SBI HL Maxgain account EMI is going on for last 8 months, EMI date is 5th. I wanted to know whether I can pay the same EMI amount by online transfer to OD account before 5th, say 1st? in that case, will SBI stop ECS on 5th automatically and not deduct EMI amount from SB account? Will I be able to save some small amount of money due to advance payment before 4/5 days?
Thanks & Regards,
Rabin Prusty
Dear Rabin, NO. Such direct transfers ‘ll not be considered for EMI. It’ll be treated as regular surplus fund parking by you.
Thanks
Ashal
Thanks Ashal…
Hello Ashal, thank you very much for this nice info.
i already have my MAXGAIN account, now i am struggling to get my TAX certificate to get tax exception from office.
SBI and branch says they don’t give any tax certificate for MAXGAIN and i cant see it in my online account too.
my OD is active too, any details on how to get the certificate will be helpful
Dear Subbu, I assume by tax certificate, you are referring to Provisional interest certificate. Please download the same from your netbanking. Although your branch should provide you. If the branch staff is not co-operating with you, please complain the same to SBI customer care.
Thanks
Ashal
Hi Ashal,
I am also looking for Prov. Home loan certificate for my MG loan account. However after login to my SBI account, i am getting message “Housing Loan Interest Certificate for Maxgain is not available online”.
Thanks,
Rajat
Dear Rajat, SBI has allowed Interest certificate download to few accounts, and not to few others. Sorry to say, you are not allowed. 🙂
On what basis, this feature if given or not given, i don’t know.
Please contact branch, to get it.
Thanks
Ashal
Thanks Ashal for info 🙂
Hi Ashal,
Many thanks for a stupendously useful article. I have a couple of questions that i hope you can answer (my MG loan is already operational).
1.Can i transfer my MG loan- it is presently with PBB Jaynagar and the RACPC branch was at Basavangudi. I would like to transfer it to a branch adjacent to me within Bangalore itself (Health city, Bommasandra) as the present location is not accessible. I have emailed the manager and he never replied but on calling he says that the brach cannot be changed as it is of a different region. Is this correct or am i being fed lies?
2. I always have a surplus amount in my MG account- enough to pay off the EMI for the month. Can i set it up so that the EMI gets paid automatically without having to route it through an SB account- t would be simpler and potentially also save a small amount.
3.Is it essential to have a SB account linked to the MG account?
4. Is it possible for both joint account holders to get independent banking access to the account?
Presently I can access the account through my wife’s internet banking (she is shown as the primary applicant).
Once again many thanks for your extremely helpful post and looking forward to your reply.
regards
Dear Robbie, here are the answers for your queries.
1. Yes change in branch as well as RACPC is possible.
2. No. EMI ‘ll be deducted from SB account itself and thus you need to route it that way.
3. A SB account in SBI ‘ll help easy movement of money for EMI ECS. Although it’s not essential.
4. No.
Thanks
Ashal
Hi,
I also have joint MG account. Me & my wife can access through individual SB account login.
You have to link both saving bank account to MG account in branch.
Hope this will help.
Thanks
Rajat
Hello Ashal,
Thanks for a very comprehensive blog on MG.
I have few queries regarding Maxgain Loan. I have transferred my existing home loan to SBI Maxgain 2 months back and 2 EMI’s are already gone.
1) I am really confused on BB, DP and AB. In last 2 months I have deposited 1 Lakh Rs. in this OD account but that amount is not displayed in OD account detailed view. It shows like below –
Book Balance – -3948023
Available Balance – 68582
Limit – 4016605
Drawing Power – 4016605
ROI – 9.35%
No where it is showing the amount I deposited, where can I get that cumulative amount ?
2) When my loan was sanctioned the ROI was 9.75% and from 5th Oct. 2015 it is 9.35%. Which is displayed when I login. Query was will this new ROI will be applicable to my loan automatically from 5th of Oct ? Or I need to go the branch and get it done ?. Will they charge for the same and how much ?
If they dont reduce this ROI on their own what is the reason behind this ?
3) Will the above change of ROI will change my monthly EMI ?
4) My EMI date is 15th of every month. My query was if I change it to 5th of every month will it be more beneficial for me ? Again is this change requires any chagres ?
5) If I plan to deposit surplus amount every month, eventually my BB will be reduced to zero after 5-6 years but DP will remain to say 15-20 lakhs. In that case if I approach to bank to close my loan will they charge me this remaining DP or how ?
6) In case I approach bank to close the loan after 5-6 years when my BB is zero, if my Surplus is more than remaining DP, can I withdraw it at that time ?
Dear prasad, please do check my two youtube videos on SBI max Gain. if you do have doubts, even after videos, I’ll answer.
Thanks
Ashal
Hi Ashal,
Can you please help me with the above queries ? I am waiting for the same eagerly.
Few more updates are –
My initial Loan Amount Sanctioned was – 4061000 on 30th of August 2015 and EMI till now is – 39558 PM. Not sure if it will change after ROI is down to 9.35 % from 5th of Oct.
Do let me know if you want any additional information from my side ? Also it would be good if you can share your email ID.
Thanks and Regards,
Prasad
Dear Prasad, the EMI’ll remain same. There ‘ll be a reduction in loan term against the ROI reduction.
1. Out of 1L Rs. parked by you, a bit has been adjusted towards interest due in August 2015. Remaining amount is part of AB.
2. Your new ROI is applied automatically. Relax.
3. EMI’ll remain same.
4. You may change your EMI date. The difference of 10 days ‘ll result in a small profit to you.
5. No extra charge. You ‘ll lose your liquidity of the amount and same ‘ll be adjusted towards DP.
6. Yes. Actually you should not leave your BB in positive as you ‘ll not earn a single penny on this.
Thanks
Ashal
Thanks a lot Ashal !!!
Yes I have gone through both the You Tube Videos of yours.
Hello, Nice article. My queries are:
1) In my case, I have SBI Home Loan of 10 lac and Parked cash of 10 Lac. Now, bank wouldnt charge me any EMI right? (i.e. Interest on Parked funds = SBI home loan interest ???)
2) Can I park higher fund than actual loan amount? (means Current Loan is 10 lac and parked funds is 12 lacs). In this case, I get interest calculated at Home loan rate on 12 lac (because normal FD rate is 8%)
Thanks for clarifying.
Dear Chaitu, EMI ‘ll be debited even now but there ‘ll be no interest on you as your BB is zero. So you can remove your EMI amount immediately after credit into Max Gain account.
You ‘ll not earn any interest on your parked money. hence no benefit in parking extra 2L.
Thanks
Ashal
Hi Ashal
great info you have provided.. I wanted to know more about the interest earned on positive book balance.
So my Home Loan is 14 Lakhs and I am thinking of increasing the surplus amount to 15 Lakhs to make the book balance positive. In this case, as my understanding goes, EMI will go towards payment of principal amount and interest part will be nullified. However as the book balance is + 1 lakh, will I earn interest at 9.55% on it?
Can I use this OD account to earn interest of 9.55%?
Thanks in advance
Regards,
Amit
Dear Amit, sorry to say but you have not understood the article. There is no positive interest interest earning in Max Gain. So making your book balance positive’ll not earn that 9.55% interest. To understand this thing, please do check my two youtube videos.
Thanks
Ashal
Hello Ashal,
I have a query regarding the available balance in my max-gain loan related OD account. When I checked the available balance yesterday morning, the available amount was around Rs. 16,85,000/-. Sometime during they day or so, SBI has debited an amount of Rs. 24516/- towards interest from this account. Today, when I checked, the available balance is Rs. 16,32,976/-. I am not able to understand how it is this value.
Is there a way to see available balance on a day wise basis? It is not shown even in the monthly statement sent by SBI.
Thanks,
Amit.
Dear Amit, please send me your account statement in excel format.
Thanks
Ashal
HI Ashal,
I am holding SBI Maxgain loan,planning to close my loan since my payment is very near to DP.
1.What are the next steps to close my account?
2.Now my house paper’s are registered with SBI bank name,do i need to re-register back to my name OR do i need to cancel the SBi registration?
3.Do i need to pay any Extra amount to bank to close my account?
4.Where do i approach for all the next steps? RACPC OMR or Bank branch?
Dear Sivaprakasam, when your home loan is running on zero% interest rate, why do you want to close it?
Thanks
Ashal
I have one query. Apologies if it has been answered before. My case is:
Property type – under construction
Loan with HDfc -52 lac disbursed of 60 lac. Approved
Planning to switch to max gain.
If I tell sbi that I want 52 lac as fully disbursed with them, then
can I withdraw funds in this scenario which I parked as surplus funds?. As in, though property is under construction but loan amount is fully disbursed.
Dear Mohit, once the transaction rights are activated, you can move in and out your money freely.
Thanks
Ashal
Hello Sir,
I am replying to this blog again after a year or so as it’s the best source to understand Max Gain. Here is the situation now:
I do not want to “park” money on the SBI maxgain account because I do not want liquidity of that amount. I just want to bring down the loan principal forever by doing prepayment. This is because parking money will just save some interest for me but prepayment will bring down the principal and will be more beneficial eventually. I hope I am right.
I gave the cheque worth Rs 2 lacs to the bank for prepayment purpose. But when I checked the account, that amount was seen in the “Available Balance”. This means that my loan principal is not reduced forever; the money is just parked there.
The officials in the SBI are now saying that I cannot do prepayment unless I am going to pay more than 20% of the principal amount. And they are saying that prepayment can be done only twice in the entire tenure. Is it correct or SBI is misguiding me?
If this is the case, how come Max Gain is beneficial for those who can prepay the loan once in a year or so? When i transferred my loan from HDFC to SBI, I was told that prepayment is allowed.
Dear Amey, why do you want to prepay? Either you prepay or keep parking money in Max Gain, in both cases, the effect same in the form of less interest outgo. Where is the benefit to you?
Thanks
Ashal
I see.
Extra payment towards principal only (i.e. prepayment) will bring down my “dues” (principal) to the bank. It will bring down tenure as well. And that’s why we are advised to prepay any loan whenever possible and close it asap. Isn’t it? How to get this benefit in Max Gain?
Now since this is not allowed, I am earning interest on my “parked” money at just 9.95%. If prepayment means just parking the money there, then I can invest it in the tool which can earn me more ROI. Is it not the wise option?
Please help me understand it better.
Just for sake of discussion, if you do have book balance zero today, does it make any difference to you that loan is running for next 1Y or 20Y?
Thanks
Ashal
Hi Amey,
Max-gain works very differently from ordinary home-loan.
I would imagine max-gain as something like the following(let us put aside emi’s for a second):
Say I needed money(say 2 lakhs) and I approached a friend, he is willing to lend me money but at some rate of interest.
But he says, he will open an account for me and put that money there and I am free to use the money from that account.
He says he will check the balance every day and charge me interest only on how much money I have used up in this.
Let us say I only wanted 10k for a trip, he will only charge me interest on the 10k and not on 2 lakhs.
After the next salary if I put that money back in the account he will not charge me any interest at all.
Now I still have the option to take upto 2 lakhs from the account whenever I need it.
To understand prepayment in this context, it is like telling my friend “Hey I no longer need a 2 lakhs credit line, you reduce it to say 1 lakh”. This is what pre-payment essentially means w.r.t max gain.
Book balance in this scenario is
1. When loan availed – 0
2. When 10kwithdrawn for trip – 10K
3. When 10k re-deposited – 0
If I am charged interest only on book balance, why should there be a hurry to pre-pay the loan?
Whether you want to use this credit line for your expense or other investment is up to you take a responsible decision. Pre-payment is only reducing your credit line
Now re-read the article to understand how emi’s and schedule work with this picture in mind.
HTH,
Srikar
Thank you very much 🙂
Hi Ashul
I’m having a Maxgain account running from last 2 years i tried to match the available balance by adding all the parked amount till now but there is huge difference . Can you suggest me how i can calculate the available balance .
Loan Amopunt : 39.20 Lacs
Book Balance : 3175255
Available Balance : 573962
Drawing Power : 3749217
Dear Sameer, add the EMIs + any extra amount parked by you, in one column of excel sheet. Add the interest debit and debit done by you (if any) and add the reduction in drawing power in another column.
The figure should match.
Thanks
Ashal
Hi Ashul
Not getting what is reduction in drawing power.
I did like this and it is matching :
EMI + Amount Parked : 2318733
Interest debit + debit self : 1573988
A= Difference of above = 744745
Loan Amount = 3920000
Book Balance = 3175255
B= Difference of above = 744745
So A= B
but i want to know how to see available balance – Pls help ?
Regards
Sameer Saxena
Dear Sameer, what was the original Drawing power and current Drawing power? The difference between the 2 is the reduction in Drawing power. This is actual, loan repaid by you. Add into it the Interest paid by you + bank’s extra debit if any. This is all the debit amount to bank. + Any debit made by you.
On credit side, all the extra amount parked by you + regular EMIs.
The difference between credit and debit amount is your available balance.
Thanks
Ashal
Hi Ashal
Thanks i have applied for loan of 40 Lacs but taken only 39.20 Lacs and paid the balance from my self . Current drawing power is showing as 3749217 so shall i deduct it from 40 Lacs or 39.20 Lacs 😦 … not sure . can u pls share your mail ID with sameersaxen@gmail.com so that i can send you the excel of my account statement to check and advise.
Regards
sameer saxena
Hi Ashal,
I have taken a HL on 29th July, on which the EMI’s have started but full money is not yet disbursed.
Because the loan is only partially disbursed, my interest outgo is lower than in amortization schedule.
However, I was expecting the drawing power to be as follows:
DP=OLD_DP-(Principal repayed as per Amortization schedule)+EMI-(Actual interest deducted). which is same as
DP = OLD_DP+Saved Interest as compared to amortization schedule
While BB is showing as per my expectation, the DP is not following the above? Has there been a change in Maxgain home loan policy in April 2015? If not can you help me understand this.
Thanks in advance,
Srikar
Hi Ashal,
I forgot that I had already asked this question on the 2nd video page and you have answered.
However, I forgot to note down the DP after first EMI, so I am unable to correlate if the second EMI has my drawing power adjusted correctly. Will have to check it after 3rd EMI I guess.
BTW thanks a lot for the all the information and responses, its fabulous.
Regards,
Srikar
Dear Srikar, please keep the track of EMI and update me for any problem.
Thanks
Ashal
Dear Stikar, thanks a lot for the detailed answer.
Thanks
Ashal
Dear Sir,
Thanks for the detailed post on SBI MG OD account, i already have an SBI MG account for Rs. 45,00,000/- and am saving on my monthly interest outgo too. My question is on part pre-payment on the on my SBI MG OD account.
Let us assume that i am saving an amount of Rs. 7,000/- per month in my interest outgo portion, now at the end of a financial year i would have saved appx. Rs. 85,000/-, i wish to transfer this Rs. 85,000/- saved as a part pre-payment for my home loan, how can i do this in the MaxGain OD account.
Thanks in advance.
Regards
Anuj Gandhi
Dear Anuj, to prepay partially from the saved interest amount, you need to contact your bank branch. Personally I w’d not prefer to prepay as it ‘ll bring down my liquidity.
Thanks
Ashal
Hi,
I have a question on the sbi OD account and SBI loan account.
I transferred rupees 20k from my SBI saving account to SBI OD account.
This is what happened
19814 was deposited in my OD account
186 was deposited in my SBI loan account(max gain suraksha account)
why is this?
Is this gone happen ever time you transfer money from your saving account to your OD account??
Thanks,
Archana
Dear Archanar, are you having Rin raksha policy? The suraksha account is meant for this policy’s prem. money. Please pay out the whole prem. from your own pocket and close the suraksha account.
Thanks
Ashal
Hi Ashal,
First of all thanks for explaining about MG and its advantages 🙂
I do hold this type of loan account. I can see the following when i login to MG account:
Account open month: July 2012
Full Disbursed in Jan 2014
Now I can see:
Account Number
Description SBI H L MAXGAIN OD (APR15)
Name Mr. MOHAMMED QASIM PATWEKAR
Book Balance -24,88,213.00
Available Balance 0.00
Limit 24,81,832.00
Uncleared balance 0.00
Drawing Power 24,81,832.00
Currency INR
Rate of Interest (% p.a.) 9.75%
Lien Amount 0.00
(in APR 15 I paid extra money to reduce the ROI)
If DP-AB=BB, then in my case it doesn’t true? what is wrong here? Today I transferred 25000 money into this account. What would the figure next time around (7 Sept, as 5th sep my EMI is debited from my another account).
Can you please reply.
Thanks.
In between, you did not pay some interest and that’s the reason of having higher book balance. Now as you have parked 25000 Rs. extra, your book balance ‘ll return to normal equation.
Thanks
Ashal
Hi Ashal,
Thanks for the reply. As far as I know, and I checked all the previous 4 years sheet, nothing is pending from my end, no dues of any kind. What should I do? Is bank statement is showing wrong entries (not possible)?
Thanks,
Qasim.
Dear Qasim, can you mail me your account statement for all these 4Y?
Thanks
Ashal
Hi Ashal,
I’ve sent you the loan statement (to your gmail account). Can you please advise me further on this issue.
Thanks,
Qasim.
I am confused on the MAX GAIN concept. In the above example, Case – 2 Max Gain home loan, it is mentioned as “Your loan term is still 240 months but the saving of interest ‘ll keep on increasing on mly basis from the parked surplus”. So, there is no change in the loan term (tenure) and the EMI. As a max gain user, what benefit I am getting here? When the interest rate is getting reduced, it should be reflect either in the loan term (tenure) or in EMI. Am I missing anything?
Dear Ramkumar, the saving ‘ll be there in terms of less interest outgo.
Thanks
Ashal
Hi Ashal,
My first EMI was deducted on 10th Aug 15.
My OD account before EMI deduction was:
Book balance: -22,70,136
Available balance: 3,52,858
Drawing power/Limit: 26,23000
After EMI deduction (Rs 28141) it is as follows:
Book balance: -22,42,000
Available balance: 3,80,999
Drawing power/Limit: 26,23000
I couldn’t see reduction in my drawing power. Could you please help me in understanding.
I also have SBI life insurance of 41000. So total loan amount is 26,64,000 & Loan disbursed on 26th July.
Thanks
Dear Rajat, please check your drawing power today 11th August 2015 and confirm the reduction.
Thanks
Ashal
Hi,
Thanks for reply. I checked it now, still the figures are same.
Thanks,
Dear Rajat, in that case, please contact Loan servicing branch to do needful in reduction of drawing power.
Thanks
Ashal
I have max gain account in one branch (say Bhopal) & Saving account branch in other location (Mumbai). When I login through internet banking i can see both of my account listed (OD & Saving).
Last week, I went to my max gain account branch (in bhopal) & applied for transaction rights. As per branch the request is processed & they double check it that I have appropriate right to withdraw money from OD account.
However still I am unable to withdraw money from OD account.
Could you please advice what next step I should take to resolve the issue.
Does visiting the saving account branch will help?
Kindly help.
thanks,
Dear Vishal, please contact SB branch also.
Thanks
Ashal
please help me understand how my maxgain amount is deducted in principle also i cant understand how my surplus amount parked is helping me to reduce tenure.? Below is my account summary
Description SBI H L MAXGAIN AUG11
Name Mr. SUNDAR BALASUBRAMANIAN
Book Balance -11,04,435.00
Available Balance 2,80,243.00
Limit 13,84,678.00
Uncleared balance 0.00
Drawing Power 13,84,678.00
Currency INR
Rate of Interest (% p.a.) 10.2%
Lien Amount 0.00
Also please let me know why my interest rate is not changed. I tool loan in floating scheme. RBi reduced interest rate many times in last one year.. but i never see sbi reduced in my loan account. as per floating interest the current interest rate of sbi is 9.75 but my interest rate is not revised to 9.75 and still remains as 10.2. then what is the point of taking floating interest.?
Dear Sundar, before making any comment or answer, Iw’d ask you to check my 2 youtube videos on SBI Max Gain. Come back and we ‘ll discuss it in detail.
Thanks
Ashal
Ashal, I gone through ur both maxgain videos.. it was very helpful and simple. Actually i went to sbi yesterday for interest rate conversion from 10.2 to 9.75. I paid .56% of DP and converted to 9.75%.
And in my available balance i had 2.8 lacs. i gave a requisition letter to debit 2 lacs from AB and credit it to principle(DP) and my now DP reduced. is this a wise decision ? bcos frm u r vdo i understood that moving funds from AB to DP is not advisable because in long term when AB=DP we are paying interest free EMI’s. Please advise for in future or long term purpose should we keep the funds only in AB.?
Any other thoughts for getting fullest benefit of maxgain are also welcome.
Below is my current status.
Description SBI H L MAXGAIN OD (APR15)
Name Mr. SUNDAR BALASUBRAMANIAN
Book Balance -11,04,435.00
Available Balance 80,243.00
Limit 11,84,678.00
Uncleared balance 0.00
Drawing Power 11,84,678.00
Currency INR
Rate of Interest (% p.a.) 9.75%
Lien Amount 0.00
Dear Sundar, as the matter wasdiscussed between us over Google chat, hence no fresh input from my side.
Thanks
Ashal
thanks a lot ashal..I hav one more query. My emi debit date is 15th of every month. Sbi will debit my emi amt 21k from icici on 15th of every month. From the below comments I understand earlier emi payment date is good. Can u pls explain how it works and what is the exact benefit? So that I can change my emi debit date to 5th of every month.
Also, right now my ecs is with icici bankbank. Can I make the ecs account to my sbi maxgain od itself? so tat I can trfr emi amount to maxgain account 1st of evry month.?
Dear Sundar, EMI debit can happen only from a SB account. If you change your EMI date to 5th, the interest part of your EMI ‘ll remain 10 days more into Max Gain account and thus ‘ll help to reduce interest outgo.
Thanks
Ashal
Thanks for providing such a thorough post regarding Max gain. It helps a lot. I have a query, All the max gain calculator available on internet is calculating interest on monthly basis but as per comment in this blog SBI calculates interest on daily basis.
In that case is there any way to calculate exact saving through Max gain scheme.
Thanks
Dear Rajat, Please use the sheet shared in August 2013 in one of the below comment by dear Sreekant Bilurkar.
Thanks
Ashal
Thanks Ashal for your help…
Hi Ashal,
One more query, i was reading older post & understood that interest will be deducted on last day of month & EMI on other date (10th in my case).
Does that mean I also have to kept amount in my saving account on last day of month?
Thanks once again..
Dear Rajat, on the date of EMI, money ‘ll be debited from your SB account and ‘ll be credited into Max Gain account. Adjustment for principal repayment w’d happen immediately and thus there ‘ll be reduction in drawing power. The interest part of EMI ‘ll remain as it is in Max Gain account till last day of the month.
On the last day of the month, the software of SBI ‘ll calculate the actual interest due and same ‘ll be debited from max Gain account.
Thanks
Ashal
Thanks Ashal for clarification.
Please confirm me if the following situation is good for the borrower:
” The borrower has borrowed a home loan of Rs. 30 lakhs from SBI under Max Taxgain OD account scheme. The borrower pays Rs.30000 per month as EMI and parks the extra surplus amount in the OD account month after month. After a period of 3 years, the borrower has parked the surplus amount equal to the loan amount outstanding. Even after this stage, he continues to pay the EMI every month and then he withdraws an equal amount from the OD account, so that the BOOK BALANCE in his OD account always remains zero. Doing this, the borrower thinks that (a) he is reduced the interest outgo of his EMI (b) he maintains the liquidity in his OD account so that he can withdraw whenever he wants (c) he has eventually stopped paying EMI because he is withdrawing the same amount from his OD account (d) he does not need his original papers of his home immediately and he is assured that they are in the safe custody of the bank.”
Is this situation helpful to the borrower? Can you please tell if there are any loop holes with this approach that can harm the borrower?
Thanking you.
Krishna
Dear Krishna, Yes. Only important point, please divert that 30K saved EMI for investment for your other goals.
Thanks
Ashal
Hi Ashal,
Following up on the same question. Can I stop the ECS / EMI from the bank as my outstanding balance is 0 instead of paying EMI and taking out the 30k every month?
Please advise. Thanks in advance.
Basu
Dear Basu, No. Till your Drawing Power becomes zero, you can’t stop your regular EMI.
Thanks
Ashal
Hi Ashal,
I have two home loan running (one from SBI and other from SCB). I want to foreclose my SCB home loan, but do not want to transfer the home loan, instead I wanted to top up my existing SBI MG loan account by Rs. 12,00,000 (considering I have eligibility to do so) and close the SCB loan.
1. Is is possible to get the top-up loan from SBI?
2. Are there by any tax benefits?
3. How about the interest rates?
4. what could be loan tenure for the top-up loan.
For fresh eligiblity, please contact your SBI loan serving branch.
Thanks
Ashal
Hi Ashal,
I have a loan of 28L. My intrest is debited on last day of every month and EMI is credited on 9th of each month. I have the transaction rights for the account.
Could you help me understand how and when the intrest is calculated in the Maxgain account?
On which date of the month can I park the surplus money in my account to avail maximum benifit on intrest?
Thanks,
Sushant
Dear Sushant, Please park the money in Max gain as soon as it’s at your disposal.
Thanks
Ashal
Dear Ashalanshu,
Got one general doubt again. Right now my outstanding is 42L and ROI is 10.1%. I am thinking to pay and reduce the ROI to 9.75%.
Just wondering
1. how much SBI charges for this
2. If i reduce now, till what time my ROI will stick to base ROI
3. how many times totally i can ask to reduce ROI like this?
And thanks a lot for ur help and being there for any queries…
Dear Pramma, here are the answers for you.
1. The spread conversion charge is 0.57% of outstanding loan balance or should I say drawing power.
2. The spread ‘ll remain constant for remaining period of loan.
3. As of now SBI, allows it only once.
Thanks
Ashal
Hi,
This topic could be beaten to death, but search didn’t get answer to my below question. So, pardon me if it’s already answered somewhere – would appreciate a pointer.
Is SBI Maxgain beneficial for buying 2nd home for investment to use the maximum “interest” portion of loan in tax deduction?
In SBI Maxgain, if I put surplus amount in the OD account (assuming it is pre-payment and not parking), the interest outgo is minimum and goes against my wish of getting maximum tax deduction for “interest”.
In these cases where I want to pre-pay instead of parking the amount, does a normal home loan account work better than Max gain account?
Thanks,
Krish
Dear Krish, How your prepayment ‘ll work better than parking the money in terms of ‘Tax saving’? Please explain.
Thanks
Ashal
Hi,
I have taken home loan of 59.65 lakh under Maxgain, for 25 years @ 9.8% on may 2015.
with a morotorium period of 6 months, my EMI, which came on the paper that we signed was 54010 rs, which was correct. However when we went to bankk to submit our ECS letter, to our shock, we saw, the emi in system is coming to be 55677 rs.
When we contacted the loan branch manager, he said he will send this to TCS people to correct it. However despite over a month already passed, we are getting the same reply from the manager, that this is the EMI. and he says that all the EMI calculators are wrong, only this is correct.
So i want to know from you, as to whom should i approach for resolution of this issue, as it has alraedy started giving me sleep less nights. The branch people are not helping at all.
Dear Jitendra, the EMI number is not matching at all. For 59.65L Rs, the EMI amount after moratorium period is 53621. Please do tell me have you accepted any life insurance policy also along with the homeloan?
Thanks
Ashal
Sir , thanks for the excellent article as well as the excellent replies. I have two queries . First one is regarding which one is more beneficial when the total interest outgo in a year is less than two lakhs for an individual in the highest tax category. Parking extra amounts in O D make him pay less interest on the loan, thereby saving on interest. But he will have to pay an extra amount as tax,equivalent to the saved amount of interest multiplied by the tax slab. So actual benefit will be (interest saved – tax needed to pay on saved interest). Now instead of parking the surplus , if he is putting that money in debt market, FMPs etc , he can save tax on interest upto 2 lakhs;he will be also getting interest on amount he invested (minus the tax he needs to pay for interest on investment). Which one will be more beneficial ? Second query is regarding the taxation on available balance. The available balance goes up if surplus amount is kept without withdrawal due to addition of interest saved and after some time the available balance will be more than the surplus amount parked and if we withdraw the entire available balance , we are getting more amount equivalent to the interest saved. Whether this increased amount is taxable as per the tax on interest on bank savings?
Dear Premkumar, there is no tax on withdrawing your own money from the available balance.
Regarding to save on taxes by not parking enough money, let me ask you, are you really saving income tax amount due to home loan interest benefit?
Please think over it.
Thanks
Ashal
Hi Ashal,
I have a 60 lakh Max gain loan account sanctioned in Nov 2012 which got fully disbursed in march 2015 and I have received the cheque book from my loan servicing bank for transactions. After reduction in base rate the current interest rate is 10.25%. My book balance is -50 laks. Doesn’t it make sense for me now to switch to lower interest rate of 9.9% by paying the processing fee of 0.25% (approx. 30k) as i can save on the interest outgo.
Dear Kiran, yes you should opt for ROI reduction.
Thanks
Ashal
Hello Ashal,
My Home loan is sanctioned for 55 lacs for under construction property. Got sanctioned the loan from SBI only for safety as I have sufficient funds for next 4-5 installments . I might require the loan amount only in next year 2016.
My query is:
I had opted for full EMI. I need to take at least 1 disbursement in six month As the sanctioned is valid for 6 months. Since I have sufficient funds right now. If I take single disbursement in order to keep the Home loan account active and pay it off immediately then principal amount will becomes zero.
a) Will my loan account will still be active after 6 months? as principal amount is zero
b) should I have to pay the EMI for next month (i.e 53, 000 full EMI for 55 lac sanctioned amount)
What is the best option in front of me?
Regards,
Mallikarjun
Dear Mallikarjun, please take partial disbursal of loan. After that park some own money into Max Gain account. Please do remember, EMIs ‘ll be debited regularly and due to your parked surplus amount, there ‘ll be no interest but the interest part of your EMI ‘ll swell there automatically.
So, keep getting disbursal in between and keep parking your own money in Max Gain.
Thanks
Ashal
Hello Ashal,
When i had applied for loan i had not opted for Max gain (lack of correct knowledge about MAX gain). I currently residing outside of India. I had checked with bank in order to convert into Max gain i had to do some paper work again and also Rate of interested would be 10.45% with CRE Max gain(for NRI).
Is there any other option apart from MAX gain.
Regards,
Mallikarjun
Dear Mallikarjun, please ask with your branch to convert the loan into Max Gain. For signing the papers on your behalf, you may prepare a power of attorney in favor of any family member.
Thanks
Ashal
Thanks a lot 🙂
Hi Ashal, I really appreciate you for helping others and making things simpler to understand.
For my home loan for an under construction property, below is the snapshot:
Limit = 40L
Book balance = 24L
Available balance = 16L
Drawing Power = 40L
I want to park 12L to reduce my current interest outgo as there is delay in the construction and as per your article I was under impression that parking 12L will reduce my Book balance to 12 L and will increase available balance to 28L which bank will release for future demand from the builder.
But I have been informed by one person from the branch that putting money in my OD account will reduce interest but because of margin calculations Available balance will further reduce and even 16L will be not be available.
I will really appreciate you help here.
Dear Pranav, please do not park your own money into Max Gain as you are not having transaction rights and in case of need, you can not pull it out.
thanks
Ashal
Hello Ashal,
Great article on MG. It gives real insight for HL borrowers.
Now, do you have an xls which can be used to track. Xls should be capable of entering the interest rate for every month instead of at the loan disbursement time as the rates may change. For eg. SBU has reduced the rate from 10.1 to 9.95 from today.
Thank you.
Regards,
Praveen
Dear Praveen, please check the Max Gain google sheet shared in the comments by dear Sreekant Bilurkar.
Thanks
Ashal
Hello Ashal,
SBI has recently announced that their base rate for home loans has been reduced to 9.85% from 10%, effective from 10th April 2015. When I took a Max-gain home loan (based on floating interest rate) from SBI in Oct 2013, I got it at 10.5% (with 0.5% loading). Over the last one and a half years, the loading has come down to 0.15% but, my interest rate is still at 10.5% only.
Now that the base rate has been reduced, can I expect any reduction in my home loan’s interest rate? If so, by how much?
Thanks in advance,
Amit.
Dear Amit, your effective home loan rate is base + 0.5%. Hence post reduction in base rate, your new home loan rate ‘ll be 10.35%.
Thanks
Ashal
Hi Ashal,
Thanks a lot for this post. I got my max gain 22 months back. 85% already dispersed and final dispersmant will be around Jan,2016 only.
I recently visited home branch and linked it to my existing SB account and got my online rights. I tested and am able to transfer from SB to MG and MG to SB account.
But i remember seeing in ur post that online transfer rights will come only post final dispersement. I want to park my extra money to save interest. But i am worried if they would lock/revert transfer rights later.
Should i park my extra money (which i may need later) or should i wait?
Dear Pramma, if transaction rights by mistake of SBI officials have been activated on your Max Gain account, start taking benefit of the same.
Thanks
Ashal
thanks Ashal. I will do.
Hi Ashal ,
I have taken a MG account on Oct 2013 for 35 L (around 80% of 43.3L which is my property value) for 20 years, my property is under construction and i am paying Full EMI from Jan 2014.
As of today Bank have transfered Rs 2598588/- to builder.
Below is details
Book Balance -23,19,081.00
Available Balance 11,12,861.00
Limit 34,31,942.00
Uncleared balance 0.00
Drawing Power 34,31,942.00
I’m paying 35000 EMI.
Whether bank will transfer the above Available Balance to builder completely. In the above available balance almost 2.8 L is interest saved.
Regards,
Sara
Dear Sara, out of 35L Rs. sanctioned loan amount, how much has been disbursed already?
Thanks
Ashal
2598588 ie approx 26 L and last disbursal has not happened.
Dear Sara, bank ‘ll transfer only the undisbursed part from your available balance.
Thanks
Ashal
Hi, Ashal
First of all i would like to thank you for authoring such an Interesting Article and shared it with people like us to educate
more about the Loan Financials, However i do have a question
if you could please help me in finding the answer for that.
I have taken a home Loan of 57 lakhs from IDBI (interest Saver) similar to maxgain product which has a rate of 10.4% ( interest on this product is higher by 0.15% from the bank’s base rate). My Full loan Amount was disbursed on 17/01/2015 and my first EMI starts from 10/03/2015 whish is of Value Rs 56525, Now few days back i received a Provisional Interest Certificate from the bank which shows me the following Figures:
1) Interest from 01-04-2014 to 09-03-2014 = 84453
2) Interest from 10-03-2015 to 31-03-2015 =35961
3 Principal from 01-04-2014 to 31-03-2015 = 11650
Now i transferred Rs 94000 to my OD account on 03-02-2015.
My question here is since my EMI has not yet started , so will my Available Balance in OD account help brings down my Interest liability from the Very First EMI ??
Also, since the figures of Interest in this Certificate could be different from what actual ineterest could be debited, would that bring on any obligation on me to get the Certificate corrected for Tax Exemption purpose??
Thanks!
Dear Puneet, any amount parked by you in Interest saver account,’ll increase your available balance and thus ‘ll decrease your actual interest outgo. Yes you need to arrange new interest certificate for income tax return filing purpose.
Thanks
Ashal
Hello Ashal,
Sorry for being a stupid and asking silly questions but here are my question. I have taken a loan of 35 lakh from SBI and have enabled SBI max gain.
My EMI has not yet started.
I can see money getting deducted every month end from my OD account in form of debit interest
31-Jan-2015 (31-Jan-2015) DEBIT INTEREST 29,926.00
31-Dec-2014 (31-Dec-2014) DEBIT INTEREST 29,061.00
30-Nov-2014 (30-Nov-2014) DEBIT INTEREST 28,709.00
Now i have few questions here
1>Why this additional amount is getting deducted from my account?
2> I have parked 4 lakh in my OD account and it is getting deducted as debit interest (mentioned above) but nothing is getting deducted from the loan amount? So even if i do not park money in my OD account will this debit interest be deducted from my account?i.e. is this debit interest a mandatory part of home loan?
3>On the same question is Debit interest mandatory ir respective of whether we park money in OD account or not?
4>If the answer is true for the above then i assume that this debit interest will keep on adding to the existing loan amount if we do not have any money in the OD account? Is that correct? 😦
Dear Raj, here are the answers.
1. It’s the interest due on you, as loan has been disbursed.
2. As EMI is not started, reduction in principal (drawing power) is not happening. Interest is mandatory.
3. Once you have taken a loan, there is interest liability on you to pay. The same is debited here.
4. As you have parked 4L Rs. you have done a good job. The interest is actually less. Yes you need to park more money to reduce the interest outgo.
Thanks
Ashal
Hello Guru,
Sorry for being a stupid and asking silly questions but here are my question. I have taken a loan of 35 lakh from SBI and have enabled SBI max gain.
My EMI has not yet started.
I can see money getting deducted every month end from my OD account in form of debit interest
31-Jan-2015 (31-Jan-2015) DEBIT INTEREST 29,926.00
31-Dec-2014 (31-Dec-2014) DEBIT INTEREST 29,061.00
30-Nov-2014 (30-Nov-2014) DEBIT INTEREST 28,709.00
Now i have few questions here
1>Why this additional amount is getting deducted from my account?
2> I have parked 4 lakh in my OD account and it is getting deducted as debit interest (mentioned above) but nothing is getting deducted from the loan amount? So even if i do not park money in my OD account will this debit interest be deducted from my account?i.e. is this debit interest a mandatory part of home loan?
3>On the same question is Debit interest mandatory ir respective of whether we park money in OD account or not?
4>If the answer is true for the above then i assume that this debit interest will keep on adding to the existing loan amount if we do not have any money in the OD account? Is that correct? 😦
Hi Ashal,
I have taken HL and first disbursement happened on Aug 2014. Since then I have been paying PreEMI every month by online transfer manually. I have opted for start of EMI after 18 months. The property is not yet ready and 18 months quota is getting over by Feb 28 2015. So my question is will EMI start automatically from March 1st onwards or do I need to visit the branch or RACPC to activate this process? If yes, what is is process? If it starts automatically, can I opt for ECS from other bank, what is the process for the same?
Thanks in Advance,
Rabin Prusty
Dear Rabin, EMI ‘ll start automatically. Yes to be on safer side, you should contact your loan serving branch for the same.
Thanks
Ashal
Hi Ashal, can you help me with this please?
I have an education loan account with SBM.
I see that my cleared balance is Rs. 12,71,328.
My loan limit is 20 lakhs, which has what was sanctioned.
I also see that the “drawing power” is 13,91,253.
Rate of Interest 12%
I would like to know what “drawing power” means.
Does it mean that I can withdraw Rs. 13,91,253 from my loan account, apart from the amount I have already withdrawn?
Or does this mean that, this is the actual amount outstanding – and that this is the amount that I need to repay?
If it means that this is the amount that I have to repay – how is this possible? I ask this because I have been making monthly interest payments and I have only withdrawn Rs. 12,71,328 from my loan account.
I should be repaying only Rs. 12,71,328 and not Rs. 13,91,253. Could you please explain the difference between these numbers?
Drawing power means actual outstanding loan amount as on date. As you have opted for partial disbursal, the difference in availed amount and DP can be withdrawn now. Yes, DP is waht you need to pay to close the loan.
Thanks
Ashal
Thank you so much for the clarification Ashal !
Dear Ashal,
I have availed SBI Maxgain Home loan. The loan has been fully disbursed on 26 Nov 14. The date of first installment was 25 Dec 14. This means that till now, I have paid one installment on 25 Dec 14. During this period I have deposited 4,61,800/- in the account and withdrawn 1,30,821/- from the account. Additionally, my monthly installment has been transferred from my SB account to Maxgain account automatically on the due date (25 Dec 14). This means that I should have 4,61,800/-(deposit) – 1,30,821/- (withdrawal) = 3,30,979/- as the available balance. But actually my available balance is being shown as only 2,72,111/-. My account also shows two entries as debit of interest on 30 Nov 14 and 31 Dec 14. In one month, my DP has gone down by almost 59000/- whereas it should have reduced by about 9000/-.
Can you please decipher the situation for me?
Thanks in advance.
-Navneet
Dear Navneet, interest entries are OK. The more than normal reduction in drawing power is due to bug in SBI software. Please wait for Jan 2015 EMI to cross check the same.
Thanks
Ashal
Hi Ashal,
I have taken a Maxgain loan of Rs 30 lakhs. Once I accumulate more than 30 lakhs in my maxgain account, I am assuming that the monthly interest will be Rs. 0. So at the time of closing the loan, will I have to pay any more interest?
Also, if I don’t close the loan once I accumulate the Rs. 30 lakhs in my OD, will SBI continue to give me the provisional loan certificate for tax saving purposes?
Dear BVSudhira, Once the DP = AB, there ‘ll not be any more interest outgo on you. As there is no actual interest outgo, why do you want to get provisional interest certificate?
Thanks
Ashal
Hi Ashal,
Once the interest outgo is 0, does it mean that my loan is completed? So does that mean that I cannot claim any savings in the section 80C and section 24 for tax savings?
You can claim section 80C related benefits as you are still paying back loan principal. You can not claim interest benefit under section 24(b) as interest outgo is zero.
Thanks
Ashal
Thanks very much Ashal. Also once my interest outgo is 0, can I close my loan immediately? Will there be any penalty for closing the loan early as my loan tenure still has 15 more years to go?
You can apply for closure of loan account immediately. There is no penalty for the same. Please do note, due to loan closure, you ‘ll lose the liquidity of your own money.
Thanks
Ashal
Hi Ashal,
Is there any possibility that SBI (max gain) will allow part payment. from what is mentioned above say if I want to do part payment of Rs. 15,00,000 so that drawing power will be reduced to Rs.15,00,000 and available balance will become Rs. 15,00,000. Currently, we are allowed to park the amount and withdraw it whenever required but I want to make only 50% payment and still continue my loan, is that possible?
Yes, it’s possible.
Thanks
Ashal
Hi Ashal,
I have some queries regarding the my Max gain account.
(1) Last month I missed the EMI amount of INR 24228 (EMI Date – 3-Dec-14) to be deposited to my saving account. After 2-3 days I realised the same and deposited amount of INR 25,000/- to saving account on 8-Dec-14. However, saving account has blocked my EMI Amount under SI Hold and uncleared balance. When I contacted my home branch, they told me same would be resolved either by EOD (18-Dec-14) or by my next month due date (3-Jan-15)
(2) Within same month I got bonus of INR 2,02,100/- and I transferred the entire amount to OD Max gain account on 17-Dec-14. Before transction, I have ‘Zero’ available balance in the OD account. Now on 18-Dec-14, the amount shows under ‘Availbale balance is INR 1,81,634/-
I am not able to tally any of these amount. Request you to kindly provide your expert guidance to resolve this issue.
Dear Hari, please mail me your account statement in exl. file format.
Thanks
Ashal
Dear Ashal,
I have query related to my drawing power also.
1. How Drawing power or limit is calculated?
2. How I can get a detailed statement of the drawing power?
Dear Hari, Drawing power is reduced each month as per your basic loan amortization schedule. To get the detailed statement, contact loan serving branch.
Thanks
Ashal
Hello Ashal,
I have recently opted for the SBI Maxgain loan. I have very basic question though.
I was having my SBI savings account earlier with online banking facility, now with this MAXGain loan approval and disbursement; I can see 2 more accounts linked to my existing SBI account. One of them is shown as “SBI H L MAXGAIN OD” and other one is “MAXGAIN SURAKSHA”
Now confusion here is, I am not sure if my savings account will be treated as OD account and I need to keep balance in my already existing savings account to get benefits of MAXGain or it should be the new account opened as “SBI H L MAXGAIN OD”?
If it is newly opened “SBI H L MAXGAIN OD”, can I get cheque book and ATM card for that account as well, so that I can use it as regular savings account. Can I transfer money online to this account in the same way one can do for other accounts?
Regards,
Parag
Dear Parag, to get the benefit of Maxgain, you need to park money into OD account. Yes you can get cheque book for the same. Off late SBI is not offering ATM card separately but you may link your existing one with OD account.
Thanks
Ashal
Hello Ashal,
In my SBI Maxgain Loan, After registration extra amount will be left with bank. Will I be able to draw these amount for any other purpose other than my home loan ? Or SBI will register the loan for max amount drawn.
Dear Narayana, post final disbursal, you should apply for transaction rights. Once transaction rights are with you, you can use that not disbursed loan part.
Thanks
Ashal
does this mean, one will get transaction rights before the complete approved amount released?
Dear Pramma, normally transactions rights are given after final disbursal. But in some cases, by mistake, SBI officials have given even before final disbursal.
Thanks
Ashal
Hi Ashal
In the pre-emi stage sbi didnt give an option for ecs. My savings account is in hdfc. Now if I park surplus amount in OD account will the monthly interest be auto debited from that ? Or should I reach to sbi bank every month. Will I be able to get the amortisation schedule from the bank even in pre emi stage ?
They didnt collect any post dated checks from us either .
Thanks
Sarath
Dear Sarath, during pre EMI stage, although SBI ‘ll ask you to pay regular payments towards pre EMI but you can simply park surplus amount into Max Gain and from there the system ‘ll debit the interest automatically.
Thanks
Ashal
Dear Ashal,
I understand that the rate of interest for Maxgain and normal home loan accounts is the same for SBI. Is the EMI for both types of loan accounts same or different? Is the EMI for Maxgain slightly higher because of interest calculation on “daily rest” instead of “monthly rest”?
Dear Navneet, the EMI for both types of loan is same. Both loans are under daily calculation but mly rest mode.
Thanks
Ashal
From the comments posted here I see that various people are repaying their SBI Max Gain loan with different interest rates at a given point of time, for some it,s 9.95, for others it,s 10.7, and also many other rates. I understand that the bank can change the rates over a period of time, but is the interest rate different at different states?
ALSO, isn’t it truethat SBI offers only floting rate of interest now both in ordinary/MaxGain loans?
I was under the impression that the Max Gain loan rate = ordinary home loan interest rate at any given point of time, and the two also vary by the same amount over the same period .
Also, if the interest rate (in a normal home loan) falls after a certain hike does MaxGain interest rate also falls or remains at the upper value? Or do we have to pay charges (@ 0.56% of the DP) to get it back to the lower value?
I am concerned because in a loan of approx 30L, a small diference in ROI also creates a lot of differece in the long run.
Please clarify,
Thanks,
Dear Anirban, the differential rates for each one of us are there due to differential spread offered to us at different time. All ofus never took loan at the same time. For example, as on date, the new customers are getting 0.15% spread over base rate. So new loan rate is 10.15% (10% base rate +0.15% spread). Earlier this spread was higher so old loans are running with a higher as on date actual interest rate. These high rate loans can be bring down to lower rates by paying conversion fee of 0.56%.
Please do note, from here on wards, if there is any change in base rate, the same ‘ll reflect in all home loans by same basis point. be it upside or down side.
Thanks
Ashal
Dear Ashal,
Thanks for the prompt reply,
I was told by the SBI local branch that home loan ROI ‘s are floating only at this time (10.10% for women 1st co-applicant, 10.15 for others). That means if I take a loan now at this floating rate, this ROI can change in the future, in two ways
i) if RBI change the base rate from 10% to (say) 11%
ii) if SBI changes the spread from 0.10% to (say) 0.45%.
At a later point either/both of these may came back down or go up further. My question was, if they come down in future would the ROI applicable to my home loan also come down (given that the ROI is floating) or do I have to pay some charges to make it come down, as the case you have cited in your reply.
Thanks again,
Anirban
Dear Anirban, there is some serious mis-communication between you and the bank executive. Why? Once the spread is fixed over base rate, it ‘ll never change in your loan term, unless you are paying fee to get a different one. As it’s just 0.1% for women and 0.15% for non women borrowers, chances of this spread going to down to zero are very remote. In case this spread is increased in future. You ‘ll of course not pay fee to get a higher spread. That’s how you ‘ll remain insulated on spread front.
Coming back to Base rate – It’s not fixed by RBI. It’s SBI’s internal calculation and going forward, it may go down as well as go up. So with base rate your own actual home loan rate ‘ll move in tandem.
Now you need to answer a simple question. Interest rates are running high for last few years, do you see from here on wards, remain at same level, or going up or going down?
Thanks
Ashal
Dear Ashal,
Thank you for your very informative blog and videos on MaxGain. I have one doubt regarding the EMI date. How does the ECS debit date affect my savings on interest/ whether the ECS debit date doesn’t matter ?
If I am right, the principal portion of the EMI will get deducted from DP and thus BB will reduce (as BB=DP-AB, assuming AB remains the same) which will result in more savings on the interest charged for the subsequent days on the month. In that case isn’t better to pay the EMI as early as possible every month ?
Please correct if my understanding is wrong.
Thanks and regards,
Sudarsan.
Dear Sudarshan, yes an early date ‘ll result in more saving in interest outgo. So your understanding is correct.
Thanks
Ashal
Dear Ashal/Manish,
I have gone with SBI Max Gain HL only, The loan officer mentioned that, “Whatever the surplus that I park during the construction phase (or till the fill disbursement of loan) will directly go towards principal. i.e I wont be able to withdraw the parked surplus during construction phase after the full disbursement.”
Is it correct?
Dear Santosh, the surplus parked by you during construction phase is available to withdraw, post final disbursal.
Thanks
Ashal
Hi Ashal – thanks for your wonderful article.
I have an existing home loan with Axis and current interest rate is 10.25. I am planning to shift to SBI maxgain with 10.15% interest. Also my wife works with HSBC and they are offering 10% interest rate for their staff.
Though HSBC is offering it for 10%, I would prefer to go with SBI since private banks increase the rates anytime. I went through your article. My query is regarding property insurance. I do not have any existing property insurance and I have been asked to take a property insurance which is mandatory with SBI. Please note my apartment is still under construction and will be handed over possibly in Jan 2015.
Would you please suggest some good property insurance plan? Should I prefer one time premium or monthly premium? Is this insurance covers only for home loan tenure of max 30 years? What if we need to add burglary/theft and appliances cover too in this insurance? Sorry if this is off topic as this is insurance related however it will really help many people as they will also be looking for property insurance while taking home loan.
Typo error – my current interest rate with Axis bank is 10.75%
Dear Ramesh, if you are comfortable with SBI, opt it for home loan. Regarding property insurance – the basic insurance which is to be purchased along with SBI home loan is meant for building only and not it’s content. This building only insurance ‘ll cover the risk against, fire, earth quake, flood and any other natural calamities.
To cover the contents (say gadgets, TV, Washing Machine, Refridgerator, AC, Jewelry……), you need householder’s policy covering these contents. Please do note, once the possession of your house is with you and you are actually living in the house, you may purchase this policy either from the same insurer (building risk) or from any other insurer of your choice.
Thanks
Ashal
Thanks Ashal for your response. I decided to go ahead with SBI and take their in house insurance policy. Would you please share SBI maxgain calculator?
Also an important query. SBI RAPC still claims that payment term tenure will come down in maxgain home loan if we regularly Park money (ex, Rs.5000) in OD account as the interest outgo will be less compared to actual said interest in amortization schedule. As we pay equated monthly installments and interest outgo gets reduced based on the amount parked in OD, balance amount in EMI will go towards principal. I know many has asked this question but if you don’t mind, would you please help/clarify with an example?
Dear Ramesh, I do have Max Gain personally. There are a lot of friends from my office who are using Max Gain. None is having the thing as told to you by RACPC guys. Loan term never ever comes down in Max Gain. The only thing which changes is the interest outgo. I do have surplus amount in my Max Gain account. Still only the scheduled amount is adjusted towards principal, not a single penny more.
Thanks
Ashal
Hi Ashal,
I have given ECS mandate for EMI for MaxGain Account. I parked some amount. EMI is not debited from my SB account. But DP has been reduced. Why is this so?
Is EMI not compulsory in MG?
Dear Raghavendra, please ask your bank for non-debit of ECS from your SB account. If there is any available balance in your MG account, DP can be reduced from it.
Thanks
Ashal
Thanks Ashal
My pleasure.
Thanks
Ashal
Hi Ashal,
Can you please let me know how will be interest calculated for tax rebate in case I have put surplus money in Max Gain. E.g Loan amount is 25L I have put 5L as surplus money and may be later due to some reason I withdraw say 2L.
Dear Patil, the tax benefit ‘ll be there on your actual interest outgo. The actual interest outgo ‘ll depend on your book balance. Your book balance ‘ll change as you deposit or withdraw your money. So whatever actual interest is debited on the last day of the each month, is available for tax benefit as per your normal section 24(b) limits.
Thanks
Ashal
Hi Ashal,
An important and wonderful work indeed. Thanks for this.
I have a query – I have just started max gain loan, first EMI is due in the next month. But the house is under construction. So to utilize the max gain, I am planning to invest available money with me in FD instead of parking it in max gain. Considering NRO FD will not be taxable, will it be a good deal for me?
Or shall I park the surplus amount in max gain?
Please suggest.
Cheers,
Mahesh
Dear Mahesh, let me clarify, NRE FDs are tax free not NRO. So in case you are going to put money in NRO Fd, the interest ‘ll be taxable for you. If you are not in need of amount, you may park in Max Gain but do remember, you can not pull out your own monwey in case of need till final disbursal of loan amount and transaction rights are activated on Max Gain.
Thanks
Ashal
Thanks Ashal. In short, may I know if I don’t want to put in max gain right now; which is the best way to invest it and get the returns better than max gain interest rates?
Of course, this investment will be considering some risk.
The reason I am asking this query Ashal because I know this is the only right time and money I have to invest better. Later on once my liabilities increases, it will be difficult for me.
Dear Mahesh, you may park your money into FDs or debt MFs.
Thanks
Ashal
HI Ashal,
I have taken SBI Maxigain Homeloan.
In My Bank they are saying i can’t withdraw the surplus funds parked(before registration) even after registration and with transaction rights activated in OD.
The reason I am asking, I am planning withdraw my PF (10 Lakhs) and park it in my OD account. That reduces my HL Repayment period by 10 yrs(total loan 38 lakhs, duration 20 yrs). And the same time wanted to have the liquidity after registration.
My Property is still under construction expecting it to complete by next April 2015.
Can I withdraw surplus funds parked in OD anytime after Flat registration(irrespective of deposited before or after registration) ?
Thanks,
Praba
Dear Prabakaran, once Transaction rights are activated, you can very much park and withdraw your surplus fund. Withdrawing PF money to park in Max Gain is a bad IDEA. Please do note, the loan term ‘ll not come down in SBI Max Gain, your interest outgo ‘ll only come down.
Thanks
Ashal
Dear Ashal,
I have SBI max gain loan, property is under construction, I am handing over one by one demand letters to bank whenever I am receiving those from builder. But there is a proportion of personal contribution versus bank’s disbursement. So I am aware that there is still some 5% of personal contribution left from my side. At the end bank will ask me to pay that first and then they will disburse their final contribution.
On the other hand I have already started putting my savings to loan account. The amount I have already re-payed to loan account is far more than my remaining contribution.
*My query # 1 is – In this scenario do I need to care about giving my personal contribution first to builder and then only bank will disburse their final one? Will they not consider my deposited amount against my remaining contribution?
*My query # 2 is – I have not received my internet banking kit from SBI. The reason is my linked EMI SBI account does not have KYC checked and right now I am out of India. Is there any solution so that I can get my internet banking kit to my home address in India?
Kindly ignore the last query if it is out of the topic.
Thanks a lot, Ashal. Needless to say you are doing a very noble work here.
Dear Mahesh, Please pay to builder, your remaining contribution. Your parked amount in Max Gain is merely surplus from bank’s calculation and it has nothing to do with your payment to builder.
You can request to provide internet kit to your joint account holder if any.
Thanks
Ashal
Hi Ashal,
This is my 3rd or 4’th conversation with you. Thanks again for your kind support to all of us.
What I wants to know, I have sanctioned loan of 38 from SBI. But for the flat which is under construction right now, I will be utilizing only 20 lacs out of 38. Once I get the possession of this flat, may I withdraw remaining say (38-20=18 lacs) anytime from this max gain account?
Is there any constraint that I need to utilize few % on flat only & I can’t withdraw it later for my personal work?
Note: Right now few of the demand letters which are receiving from builder, I am directly paying it & few I am forwarding it to SBI. I think this will reduce my tenure of loan and/or interest on the loan. But I don’t want my eligibility of 38 lacs to get reduced because I am not utilizing the loan amount fully. Please suggest.
Cheers,
Mahesh
Dear Mahesh, to avail transaction rights on your max gain (utilizing the non availed loan amount later on means you need transaction rights), you w’d have to submit completion certificate from the builder as and when the building is ready.
Thanks
Ashal
Thanks Ashal. My other query was: If I don’t utilize total loan sanctioned amount, can I use the remaining amount for my personal cause after I submit the flat completion certificate?
Dear Mahesh, Yes you can.
Thanks
Ashal
Cheers Ashal. 🙂
Hi
I am Maxgain user and parking every month regualry.
I undestand that “Available Balance” is the money I can withdraw (or) amount that I parked in addtion. Am I right >
For the past, 13months , I parked regualary and I never withdraw from my OD account. But sum up of parked money is not mathing with the amount reflecting in “Available Balance” as on date ( 8th july)
My EMI date is 10th every month.
Can you please help me in understanding the “Available Balance” please
Dear Ramesh, I’m sending you my personal mail id. Please share your loan account statement in exl. sheet format from day one of your loan.
thanks
Ashal
Hi Ashal,
My drawing power is continuously decreasing every month, could you please guide me what to do for that? Could you provide your email id so that i can send my statement for calculation.
Thanks,
Hitesh Patel
Dear Hitesh, drawing power should come down with each passing month. Regarding my mail id, please check your inbox for my personal mail to you. Please feel free to contact over e-mail.
Thanks
Ashal
I have been facing issues in transferring any amount from my SB account to OD account. The transaction always fails and the response I got from customer care is
“We thank you for banking with us. As per analysis, the deposit / debit account is linked to a Loan Account which is a Maxgain Suraksha account. Hence In case of transfer transaction , when input amount is less or equal to the due-amt of linked Suraksha account, an error Dues in Insurance account is less or equal to input amount and your transaction got failed. For more details please contact your branch. We regret for the inconvenience caused to you.”
The branch has no clue about this error and have not been able to resolve this even after following for 2 months. They have remapped my accounts as well. They have confirmed that there is no issue with transaction rights or status of my account
Any idea about this error?
DearAshish, can you share your account statements with me? I need the account statements in exl. file format.
Thanks
Ashal
Do you need the statement right from the start or just for last few months?
Dear Ashish, all statements from day one of your home loan. SB account, MG account, Surksha Account.
Thanks
Ashal
PFA OD account statements from start. The only transactions from SB is debit of the home loan EMI. Let me know if you still require those. As far as the suraksha account is concerned that does not seem to be visible online under my net banking. I had opted for suraksha plan and the premium amount was added to my loan amount.
On Mon, Jun 30, 2014 at 6:24 PM, Asan Ideas for Wealth wrote:
> ashalanshu commented: “Dear Ashish, all statements from day one of > your home loan. SB account, MG account, Surksha Account. Thanks Ashal” >
Dear Ashish, Please send me the account details for MG account only. Also had you tried transferring to MG account from some non SBI account? If not, try once and inform me the result.
Thanks
Ashal
Additional input: I check the status of my RINN Raksha policy and its showing inforce with last premium being debited in july 2013 and next due in july 2014.
On Mon, Jun 30, 2014 at 6:41 PM, Ashish Gokhale wrote:
> PFA OD account statements from start. The only transactions from SB is > debit of the home loan EMI. Let me know if you still require those. As far > as the suraksha account is concerned that does not seem to be visible > online under my net banking. I had opted for suraksha plan and the premium > amount was added to my loan amount. > > > On Mon, Jun 30, 2014 at 6:24 PM, Asan Ideas for Wealth comment-reply@wordpress.com> wrote: > >> ashalanshu commented: “Dear Ashish, all statements from day one of >> your home loan. SB account, MG account, Surksha Account. Thanks Ashal” >>
Dear Ashish, please send me the MG account statement on my gmail id. Also try to transfer from non SBI account into MG account and update me with your results.
Thanks
Ashal
Issue is now resolved. Part of EMI was not getting transferred to my Max Gain Suraksha AC. This resulted in short fall. After transferring the due interest amount, issue got resolved.
Dear ASG, Thanks for the update.
Thanks
Ashal
Hello,
Is it mandatory have a saving account in SBI for taking maxgain home loan?
If yes, is it mandatory to have it in the same branch from where I am taking home loan?
My case :
I have maxgain loan account in one of the Personal Banking Branch (PBB) of SBI. My saving account has been in other branch of SBI (in the same city) for last 8 years. Now the loan service branch is insisting me to transfer saving account to the loan serving branch. I said it’s not possible for me. PBB saving account needs minimum balance of 5000 rs. Now the branch manager is saying that it’s mandatory to have saving account and loan account in the same branch! And he is insisting me to open the saving account if I cannot transfer from some other branch. He is pestering me so much that I am now thinking of changing loan service branch itself !
I am worried that he may deny me the income tax certificate (which I need once in a year) by giving some non compliance reasons then.
What’s the reality of maxgain saving account requirement? I tried to find it out SBI’s website but nowhere it’s mentioned mandatory. What can I do in this case?
Dear Amey, ask the PBB branch manager to provide it in written with SBI circular’s copy. In my personal case, my MG account was with Branch A and SB account was with Branch B. Nobody from ithger of the branches asked me to transfer the opposite account.
Thanks
Ashal
Thanks a lot 🙂
I will ask manager to give it in writing. Is it possible to change the loan serving branch itself?
Dear Amey, the answer is yes. In my personal case, later on I transferred my MG account from Branch A to Branch B- where my SB account was and this branch was closer to my residence, whereas the Loan branch was very far away in same city.
Thanks
Ashal
Thanks a lot 🙂
My pleasure.
Thanks
Ashal
I have a maxgain account for loan amount of Rs 28 laks. I am paying the full EMI for last 1 year even for partial disbursement. Till date I have re-payed Rs.431813. the interest charged till date is 110384.
Will the extra amount of Rs 321429 that i have paid be reduced from the Principal or will it be parked in my Maxgain account ?
Dear Sushant, out of your non interest amount from EMI, partial amount has been adjusted towards loan repayment and remaining amount is available as surplus amount in your available balance.
To know,how much you have actually repaid, please check your Drawing Power.
Thanks
Ashal
Following are the details:
Book Balance -21,85,334.00
Available Balance 5,69,798.00
Limit 27,55,132.00
Uncleared balance 0
Drawing Power 27,55,132.00
Currency INR
Rate of Interest (% p.a.) 10.25%
Does this mean that i have paid only 45000 principle amount ?
Dear Sushant, the answer is YES. Non adjusted amount (other than this 45K principal and the interest debited) is part of your Available Balance.
Thanks
Ashal
Hi Ashal, I am still not convinced if my drawing power is correct.
Could you please share your email Id so that i can forward you my statement.
Dear Sushant, please check your personal mailto get my mail id.
Thanks
Ashal
I have taken a loan of Rs.40 L for 20 yrs at 10.1% along with a moratorium period of 18 months. The bank has asked me to pay Rs. 20000 as interest for 18 months after which my EMI will be Rs. 39867. Without the moratorium period the EMI works out to Rs. 38866. My query is how will they adjust Rs. 360000 (20×18000) against the total payout of the loan. Will the loan amount become Rs.4360000 on which the revised EMI will be calculated or will they adjust the Rs.3.6 lacs against the interest paid on the full EMI. Please advice
Dear Rahul, the loan is fully disbursed or the disbursement ‘ll happen partially in these 18 months?
Thanks
Ashal
Hi
Read your article… Many thanks for clearing up a lot of things about the product… A few queries…
1. As EMI does not reduce, is more going towards principle repayment? In that case shouldn’t the loan get repaid faster?
2. Does EMI get debited in full & interest saving gets credited to OD account later (at month end) or amount debited = ( EMI – interest saving)??
If the former then wouldn’t it make sense to keep EMI date as close to month end as possible?
3. Once you park a surplus x in the OD account it will save interest outgo. At the end of say 6 months, available balance would (x+y) where y is interest saved. At that juncture, will we have x available to withdraw or (x+y)?
Many thanks!!!
Dear Shashank, here are my replies to you.
1. NO, more money does not go towards principal. It remain as surplus (available balance) in your OD account.
2. On the date of EMI credit into OD account, the principal part of EMI is adjusted towards loan and Drawing Power comes down. On the last day of the month, the interest is debited as per the calculation and the interest which is saved, remain there as part of Available Balance.
3. You can withdraw X+Y.
Thanks
Ashal
Dear Ashal
Read your post… Many thanks… Few queries…
1. As EMI remains same, does it mean more money goes towards principle repayment? In that case shouldn’t the loan end before tenure (assuming surplus is NEVER removed)
2. How is the mechanism: EMI is debited from SB A/c on EMI date (say 5th) & interest saving (assuming some surplus amount parked in OD acct) gets credited to OD acct at month end?
Or
on EMI date the interest payment (considering current book balance) & principle component gets deducted… I. E to say interest saving gets calculated before EMI payment & EMI less saving gets deducted?
3. If you park x amount in OD account… After say 5 months you will have (x+y) available there… Y being the interest saving….. Now in this situation, can you withdraw x or (x+y)?
Thanks!
Dear Shashank, please check 2 videos on Youtube uploaded by me to understand better about Max Gain.
Thanks
Ashal
Hi Ashul, My loan has started in Jan 2014 and is in partial disbursement state currently .. I tried to generate the interest certificate for FY 2013-2014 online , but I am unable to do so . Could you let me know the procedure to get the interest certificate?
Dear Ajay, in case of MG, interest certificate can not be generated online. You need to contact your loan serving branch to get it.
Thanks
Ashal
Hi,
can I withdrawn some money from my available balance(i.e.58520).
Suppose i withdrawn 40000 then how the interest rate charge. If i
repay this amount after 6 month then any penalty will be charge. My
available balance amount is not any park amount. It is total of my
principle amount. Following are my home load details:-
My EMI :- 13056
My EMI ECS Date:- 5th of every month
My loan amount:- 1300000
Book Balance -12,07,185.00
Available Balance 58,520.00
Limit 12,65,705.00
Uncleared balance 0.00
Drawing Power 12,65,705.00
Rate of Interest (% p.a.) 10.25%
Dear Bhusaan, thanks for writing in. Your original loan amount was 13L Rs. which is now 12.657L Rs. as per your latest DP. This 58K amount is your surplus amount which is available to withdraw in full. If you opt to withdraw full 58K amount or say 40K as per your query, the book balance ‘ll change. it ‘ll become either equal to your DP or 12.47L if you withdraw only 40K Rs. So interest ‘ll be charged as usual on your book balance amount. There ‘ll be no penalty on you for interest as regular interest due on your book balance is getting adjusted from your EMIs. If you opt to repay the same 40K after 6 months, the book balance ‘ll change accordingly and you ‘ll be paying less interest there on wards.
Thanks
Ashal
Hi,
I have recently converted my SBI house loan account to Max Gain. I would like to know few things.
1) They opened new Account for MaxGain. Do I need to give fresh ECS mandate to the bank? Or the old one which was there for old house loan account would do?
2) Can I get the tax exemption for the interest that I am paying from my EMI ( i.e. EMI’s interest component – Parked amount’s Interest)?
Thanks in advance.
—
Raghav
Dear Raghav, old ECS should do. Still cross check it with your loan serving branch.
Tax benefit ‘ll be there only on the actual interest debited from your MG account on last day of the month.
Thanks
Ashal
Account Number 00000033059780634
Description SBI H L MAXGAIN AUG12
Name Mr. NARAYANA MANGALAPADY SHENOY
Book Balance -27,04,111.00
Available Balance 9,28,889.00
Limit 36,33,000.00
Uncleared balance 0.00
Drawing Power 36,33,000.00
Currency INR
Rate of Interest (% p.a.) 10.4%
Lien Amount 0.00
Dear Ashal,
I think I have been explaining you in bits and pieces. Let me explain in detail. Please find the loan details and amount drawn so far. Effective from 5/July/2014 I have advised bank to deduct EMI of Rs. 35887 X 228 months.
For the drawn amount for the month of June’14 interest @ 10.40% is Rs.22534. In my case EMI will be deducted Rs.35887. Would like to know
1. The difference amount Rs.13353 ( 35887 – 22534) will be reflecting in available balance and available for me to withdraw ? To aval entire additional amount of.Rs.13353, should I inform bank to extend my moratorium period ?
OR
2. Instead of only interest payment If EMI starts ( Rs.35887) with end of moratorium period ( Interest + Principal) effective from july’14, (EMI for the drawn amount is Rs.26815/ [ Int -23436 + Pricipal – 3380, ], only Rs.9071 will be added to available balance and principal will be paid toward repayment of the loan ?
Not getting good clarity around these things. Need your help. My understanding is even if my EMI starts principal amount will get in to available balance and will be available to withdraw in future.
Dear Narayana, first of all from any loan amortization calculator, please calculate what ‘ll be the principal part from your EMI of 35887 Rs. for 3633000 Rs. loan amount to be repaid in 228 Months. I’m ready to answer all the queries but need some homework from you.
Thanks
Ashal
Thanks Ashal. You have made me to think more.
I did some more work and could conclude following. Confirm my understanding is right.
In this case @ 10.15% total interest per month is 30729 and 5158 is principal. In my case due to part disbursement interest comes up to 22872 and 13015 will be in excess. If I calulcate EMI for disbursed amount ( 270411) it is 26364 and principal amount is 3493. So If I pay 35887 and start EMI, out of 13015 other than interest 3493 will be paid towards principal and 9523 will go and sit in available balance. This will happen if I start EMI.
If I request bank to adjust moratorium period and then available balance will be 13015, principal will not be paid now.
Since I need money later It is suggested to extend moratorium period, pay only interest and start EMI later.
Please confirm.
Dear Narayana, in your 1st EMI for full 36.33L Rs. loan, the 5K figure ‘ll be adjusted towards principal. Out of the 30K figure meant for interest, 22K ‘ll be adjusted towards interest based upon your till date disbursed amount. Remaining 8K Rs. ‘ll become part of your Available Balance and help you to save more interest next month.
Thanks
Ashal
OK. Now I got it. This will help me to reduce my principal and so the interest per month. I think I am worried more on fund availability till I take over the apartment and thinking of start paying principal once I take over the property though I can save on interest. If I pay these principal amount it will not available for any emergency needs.
Once regular EMI is started, the reduction in DP means amount paid by you towards loan repayment ‘ll not be available.
Thanks
Ashal
When we draw the entire amount of loan and later when we pay emi there will be interest and principle component. Whatever is paid towards principle will be available for us to withdraw ? For Eg my loan value is Rs.35,00,000 and EMI with Rs.35000 with interest being Rs.30K and principle is Rs.5K. Will by book balance will become Rs.34,95,000 and available balance will become Rs.5000 after loan is fully drawn.
The principal paid from EMI ‘ll reflect as reduced drawing power and it ‘ll NOT be available there to withdraw.
Thanks
Ashal
Thanks Ashal. Does this happen only if EMI starts ? If I continue with only interest payment and may them more than interest accumulated will this be available to withdraw later ? So far I have paying 4K – 5 K extra then other than interest and my observation the excess paid is reflecting in available balance.
I am trying to understand here is there any changes done when we change over from Moratorium period to full EMI. If so I can inform bank to extend the period and still pay extra money other than interest which will help me to reduce interest and can be drawn later.
Dear Narayana, if you start full EMI, there ‘ll also be saving from interest part of EMI. This saving ‘ll be there as part of Available Balance. How? Say your EMI for full 35L Rs. loan amount is 33000 Rs. and now you are paying full 33000 Rs. EMI. Out of this 33000 Rs. let’s assume 3000 Rs.is meant for principal repayment and 30000 Rs. for interest towards fully disbursed loan of 35L. Now as on date loan is not fully disbursed and interest to be charged is only 25000 Rs. Hence remaining 5000 Rs. ‘ll become part of Available Balance.
Thanks
Ashal
Thanks. In that case I can opt out for extension for moratorium period so that I can start loan repayment once loan is fully drawn.
Dear Narayana, what benefit ‘ll you get if you opt for moratorium extension?
Thanks
Ashal
Dear Narayana, what benefit ‘ll you get if you opt for moratorium extension?
Thanks
Ashal
Principal will not be paid and amount will be available for me to draw later if I have any cash crunch when I take pocession of my property.
Dear Narayana, if you feel it’s beneficial opt it. But do remember, the rights of granting extension or not for moratorium period, rests with SBI.
Thanks
Ashal
Dear Sir,
I have taken loan last year and SBI has given my moratorium period till June’14. In ECS form it was indicated that from july’14 full EMI would start. In my case property it is still under construction and I have done disbursement of Rs.25,00,000 for loan value of Rs.35,00,000. EMI amount is Rs.35,000. Every month there will be excess amount of Rs.10000 effective from July’14. Will this Rs.10K will get in to my available balance and can be drawn once transaction rights are provided ? Is it OK to get in to EMI or request bank to extend moratorium period ? Please advise
Dear Narayana, if cashflow is an issue,you can request to SBI to extend the moratorium period. Any excess amount paid by you over and above your regular EMI ‘ll become part of your Available Balance and you can withdraw after activation of transaction rights.
Thanks
Ashal
Thanks Ashal. I have SBI MG account. If I pay in the form of EMI then the extra component paid other than interest will not be available for withdraw ? Eg – interest for the month of drawn amount is Rs.25,000 and EMI paid is Rs.35,000. In this case Rs.10000 is paid extra. Will this Rs.10000 reflect in available balance and can be drawn or this will go towards repayment of principal and will be available for us ? I am trying to understand if we start full fledged EMI without full disbursement will it make any difference ? Do I need to extend my moratorium period or can I start full EMI ?
Dear Narayana, the extra amount ‘ll be available for withdraw. What’s your actual EMI here?If you start full EMI, the part of EMI ‘ll be adjusted towards principal and part ‘ll be available as part of Available Balance. You can start full EMI. Full EMI ;ll help to bring down your interest outgo.
Thanks
Ashal
Hello,
i have maxgain account.My final disbursement is done just after my first emi deduction.
now the problem is i cant see the interest deduction separately in my account statement.i referred in my friend sbi normal account,along with emi deduction,interest also recorded as separate transaction.
1.how do i know the interest+principle deduction in emi? any request needs to given to sbi or racpc??
2.when i park some surplus money,then the interest part will come done as per the maxgain excel calculation.how to i ensure this break through internet banking online??
Dear Siva, thanks for writing in. When was your first EMI debited?
Thanks
Ashal
hello ashalanshu,
thanks for reply.
My first EMI date is on 5thMay2014.
Final disbursement date is on 24thMay2014
my loan amount is 18 lakhs.drawing power shows the same amount.
awaiting reply for my old queries
Dear Siva, please wait for 1st of June 2014. Interest ‘ll be debited on 31st of May from your MG account. No request from you is required for interest or principal deduction. Please check your drawing power for any reduction. the reduction in DP ‘ll be your actual principal repayment.
Interest ‘ll be calculated automatically by SBI.
Thanks
Ashal
Hello,
thanks for your reply.
few more queries..
1.Now i have some money in my hand,so i will park the same to my OD account.let us say 6 lakhs.now my out standing will come down from 18 lakhs (original load amount) to 12 lakhs.So can i able to see the interest difference during EMI- before surplus park and after surplus park??(as same as maxgain calculator value)
2.can i able to reduce my loan amount from 18L to 12 L..so that DP/Otstanding loan come down and years will reduce Am i correct/possible?? to whom to approach?? Bank or racpc??
Dear Siva, interest saving on day to basis ‘ll not be available to you to check. The interest ‘ll be saved and you can check it only at the time of actual interest debit.
Yes you can do that but in that case, bank ‘ll deduct that 6LRs. permanently and you can not use that amount again. Let me ask you a counter question – for example say you have parked 18LRs. in your MG account. Now interest outgo is zero. does it matter to you now that loan is running for 5Y or 20Y?
Thanks
Ashal
hello,
Thanks for your answers.
1.What is the purpose of loan account no?? we are working on OD account for transactions.
2.if i transfer some 1 lakhs from OD account to loan account no then does it means that i paid permanently 1 lahks towards loan??
Dear Siva, the OD account is your loan account.
Thanks
Ashal
if OD account is the loan account then,what is the purpose of another loan account along with OD Account below???
1.Loan Account Details
Account Number 00000032XXXXXXXXXX
Name Mr. SIVAPRAKASAM V
Description MAXGAIN SURAKSHA
Limit 0.00
Drawing Power 0.00
Outstanding Amount 0.00
Rate of Interest 10.25
Currency INR
C.Y.YTD Interest 0.0
P.Y.YTD Interest 0.0
Dear Siva, don’t get upset, this is your Rin Raksha policy prem. payment account.
Thanks
Ashal
yes.then during loan agreement they added rs 85k for insurance.whenthey will deduct this amount?? will be added with loan amount or separatly we need to pay?/ when??
Dear Siva, the insurance prem. amount has already been paid to insurer that’s why the Suraksha account is reading 0 figure.
If you want to save interest outgo on this prem. amount as part of loan amount, please park 55K Rs. in your main OD account.
Thanks
Ashal
Hello,
Need Urgent help,
My Statement as follows,
my Loan Amount is 18 lakhs
05-May-2014-BULK POSTING
ECS XXXXXXX- RACPC,OMR -17,604.00
24-May-2014-TO TRANSFER
FINAL DISBURSEMENT-Debit-50,000.00
From 25thMay to 30th May i parked around 6 lakhs. on 30th may my Balance is -11,56,518.00
Suddenly on 31st May-DEBIT INTEREST-14,201.00
I don’t understand the 31st may transaction???
Can you help me urgently.i am also going to have next ECS deduction on June-6th As well??
Dear Siva, relax. In case of OD account, the deduction of interest happens only on the last day of the month. So for your own account, 31st May was the last day for May 2014 and interest was debited. Where is the problem in it?
Thanks
Ashal
hello,
My second eMI is happened on 6th june.Only Book balance is reduced.there is in change in DP.
Account Number 00000032xxXXXXXXXXXXX
Description SBI SURAKSHIT HL MAXGN AUG 12
Name Mr. SIVAPRAKASAM V
Book Balance -11,19,120.00
Available Balance 6,80,880.00
Limit 18,00,000.00
Uncleared balance 0.00
Drawing Power 18,00,000.00
Currency INR
Rate of Interest (% p.a.) 10.25%
Lien Amount 0.00
how to do calculate the principle adjustment on each emi??
Dear Siva, the reduction in Drawing Power is your principal repayment from EMI.
Thanks
Ashal
But no reduction DP sofar..how to solve this issue??
Dear Siva, it may happen that your loan is under moratorium. Due to moratorium, no DP reduction (Principal repayment) ‘ll be there.So confirm the same from SBI Loan serving branch, Why DP reduction is not happening?
Thanks
Ashal
hello,
my moratorium period is over.i am started paying emi and final disbursement also done
Dear Siva, in that case, please contact SBI, why DP reduction is not happening?
Thanks
Ashal
Dear Sir,
I have 2 questions.
Q1. I have some query regarding SBI Max Gain. Bank sanctioned me Rs.36,33,000/-. Let us say I draw up to only Rs.35,00,000/- till last disbursement and paid to the builder. Do I get the access to the left over amount Rs.1,33,000/- , can I withdraw this amount without any demand letter from the builder ?
Q2. My property is not ready yet. I am in progressive disbursement mode. Right now bank disbursed Rs.25,00,000 and I am getting pre EMI around Rs.21,000 per month. But I am paying Rs.25,000 per month to the bank. After adjusting to the interest left over Rs.4000 will be in available balance. Can we get these extra paid fund disbursed later ? . From next month onwards I will be paying EMI of Rs.35,000/ – there will be Rs.10,000 paid extra other than interest amount. Would like to know whether whatever paid in excess will be available to withdraw later.
Regards,
Narayana Shenoy M
Dear Narayana, if you can produce the receipt and letter for full and final payment from builder, you can demand transaction rights from bank. In this case the un-disbursed 1.33L Rs. ‘ll be available to you for use.
Yes, once the transaction rights are with you, such extra payments done by you now ‘ll be available to withdraw.
Thanks
Ashal
Hi, I have a specific query here. I have taken a loan of 20 lacs however I used only about 15 lacs. And now I have got the pocession of the property and there is no more disbursements needed from the bank.
I have some surplus funds which I want to park in the home loan OD account, but I have been told that there is some activation needed to do transaction on the OD account (by transactions I meant withdrawal, as I believe I can deposit money anytime).
Also I have been advised that I have to personally go and visit the RACPC branch, from where the loan was disbursed, to get this activation done. I am currently outside the city where the home RACPC branch is, and plan to visit the branch in 6 months from now.
My question here is that In this case the surplus funds deposit prior activation also would be available for a withdraw post activation ? e.g If I deposit 2 lacs now and get my account activated after 6 months as mentioned, then post activation shall this 2 lacs be available for withdrawal ?
Eager to here from the team.
Regards,
Dear Vaibhav, once transaction rights are activated for you, you can withdraw even prior to rights money lying in account. No problem in it.
Thanks
Ashal
Hi,
How do I know the percentage on interest and principal of the total EMI? If I park surplus amount say ‘X’ rs, how can I calculate how much interest I have saved because of the surplus parking?
I do park surplus amounts every month, but I dont understand how much interest I am saving by that.
Please help.
Dear Sumit, this sheet to calculate your interest saving.
https://docs.google.com/file/d/0B-mdbyqMT5YHNXl4M3JjbFdyZEk/edit?usp=sharing
Thanks
Ashal
hi ashal,
Nice article.
I have a doubt regarding my max gain home loan. I have taken a loan of Rs 2800000 since June 13 and paying full EMI Rs 26928 even for partial disbursement. But even though i have repayed more than 2 lakhs, my drawing power is still showing as Rs 2762642. I have also deposited Rs 1 lakhs extra in Jan 2014.
Could you please confirm if this correct calculation or I need to talk to somebody in the bank for correcting it ?
Dear Sushant, that’s because, your loan is coming down as per your loan amortization schedule. The excess money parked by you either in lump sum or as saving in interest from EMIs is already there in your loan account with non-disbursed loan amount.
Thanks
Ashal
Hello Ashal,
For how long in a month I need to park money in Max Gain account for reduced interest benefit?
If My EMI is deducted on 25th day of the month, from which day to which day I need to park some extra amount on the OD account to get that benefit?
Dear Amey, the interest ‘ll come down if you park the money even for 1 day. More days, the money remain there, more interest saving to you.
Thanks
Ashal
Thanks Ashal. Do you know any calculator for SBI Max Gain?
I found one through Google but then saw your comment there that the calculator does not function the way SBI calculates!
Dear Amey, please check the comments below. A google sheet is shared, which is the correct one.
Thanks
Ashal
There are many links to the google sheet.
1) https://docs.google.com/file/d/0B-mdbyqMT5YHNXl4M3JjbFdyZEk/edit?pli=1
This does not work when you try to download.
2) https://docs.google.com/spreadsheet/ccc?key=0AiBKBLaj8cKfdENFWmwwOUhwUXcxc2hhaUhnRzdEeHc&hl=en_US#gid=3
This is another one.
Which is correct one?
Dear Amey, please check your personal mail.
Thanks
Dear Ashalji,
Can I get the excel file as well.
This is a brilliant effort from you..
Regards
Guru
Dear Guru, the exl. file is actually a google spreadsheet shared below in comments in August 2013 by one of blog reader named Sreekant Bilurkar.
Here is the link.
https://docs.google.com/file/d/0B-mdbyqMT5YHNXl4M3JjbFdyZEk/edit?usp=sharing
Thanks
Ashal
Also, is the interest credited on MG account taxable??
Hi Ashal,
Some basic questions on Max Gain.
Is Interest calculation in MG accnt is Compount?? (I believe it is…)
Also seeing amortization chart, i would have paid most of the required interest in 1st few years (Say 5 years).
For instance, If 50L is my loan amount, 10% is the interest for 20 years tenure. If i have not disturbed my EMI (did not pay anything other than EMI) for 5 years, i would have paid 23.85L interest alone. Now my pricipal outstanding will be 44.90L (50L – 5.09L). Now,
Option1: If i park 44.9L (total outstanding) for next 15 years,
i would have saved all remaining interest (41.92L) as per amortization chart.
Option2: If i put this 44.9L in FD for 15 years with 9% simple interest, i would have got 60,61,500.
60L is much greater that 41.92L which i saved in MG right?
I guess this unexpected loss is due to the fact that i pay most of the interest in first few years itself which i cant recover(save) whatever i do.
Is my understanding wrong. To be specific, will i save interest part of my EMI (as per my assumption above) alone OR will i get X% of surplus where X is the interest rate of the loan per year??
Regards,
Pramma M
Dear Pramma, what you observed is true for any home loan. it’s aame for normal as well as Max Gain home loan. Please do note in case of FD it’s positive compounding or forward compounding. Whereas in case of Loans, it’s negative or reverse compounding as by each passing day, your loan is repaid and less interest to be paid and hence less saving for you if you some how stop this interest outgo by repaying. So your basic understamnding is correct.
Regarding taxability of interest saved in Max Gain, NO it’s not your income. As SBI does not recover the due interest from you it does not translate into Income. EMI moving from SB account to Max Gain account is merely a transaction of money for you from one account to another account. Based upon your parked surplus, the SBI did not charge interest from you, so where is the question of income here?
thanks
Ashal
Thanks Ashal for quick reply. That helped a lot.
Couple of related questions, pls bear with me. It will help me do the right thing.
In short, MG does not allow the principal part of EMI to reduce ever.
Question 1: I chose EMI instead of pre-EMI though 50% amount is yet to disburse on Sept, 2015 (gradually for every 2 months). Extra amount i pay, does it reduces the principal, or its treated as surplus amount which i can withdraw later?
Question 2: Apart from parking, can i prepay some amount to directly reduce the principal amount permanently (which in turn reduces the tenure like non-mg loan account).
Because if that option is not there, its clearly
1. indirect way of making me continue till total tenure.
2. indirect way of encouraging me to spend my parked amount some way (mostly ppl do.. humans 🙂 ) because its liquid.
3. Most important of all, indirect way of not allowing me to reduce the actual principal amount
Its clearly max gain for SBI, not to customer!!
Dear Pramma, you can ask SBI to adjust available balance either partially or in full towards Drawing power to bring down your loan and thus reducing term any time.
Regarding your full EMI in partial disbursal stage, the excess amount ‘ll become part of your available balance and you can withdraw it later on if you so desire or can use to repay.
Thanks
Ashal
In option 1, you definitely save interest part but you don’t save on income tax deduction admissible for interest on housing loan. If you keep your emi same, then you repay the loan in a shorter term, which is good.
In option 2, you earn interest on the amount you keep in an FD but what about the tax you have to pay on the interest you earn in this FD? Of course, you can claim deduction for the home loan interest.
I have a suggestion. You can invest this amount in Mutual fund where you earn tax free dividend and claim deduction for home loan interest.
Ashal, am I right in my understanding.
Dear Chandra, yes. To opt for prepay or not is a personal choice and I respect that choice. 🙂
Thanks
Ashal
First of all, you have done the GREAT work by revealing mysteries of the MG scheme. THANKS A LOT 🙂
I am giving you all details and asking many questions in this lengthy reply with the great hope.
I transferred my loan from HDFC to SBI. When I applied for the SBI MaxGain Home Loan scheme, my outstanding principal at HDFC was Rs. 20,12,000.
SBI sanctioned me loan worth Rs. 20,12,000. However, loan processing took couple of months and at the time of completing all documentation, the principal amount left at HDFC was Rs. 19,71,797. So the actual amount disbursed to me through SBI’s banker’s cheque is 19, 71, 797 only.
Date of disbursement: 07th March 2014.
Date on which I submitted all original documents released by HDFC: 21st March 2014.
I have instructed SBI to get the EMI on 25th day of every month.
Questions:
1. “After disbursement” my MaxGain account was showing Available Balance Rs 40203 (= Loan Sanctioned – Loan Disbursed.). How come available balance is this much when I have not parked any money in OD account and actual loan I took is just 19,71,797 ?
2. Then the processing fee’s cheque got cleared and available balance increased to 41,889 ! Looks ok.
3. I was told that my EMI payment will actually start from the next month. So I did not deposit any money to the OD account. But when I checked my account yesterday, I found that Rs 13, 701 got debited from the OD account on 31-March-2014! Available Balance got reduced to Rs 28,188 and Book Balance increased to 19,83,812 which exceeds my loan amount. I thought I was short of money on OD account, so I transferred/parked 60,000 immediately to that account on 03-April-2014. But questions are:
– Was I actually short of money? When I had not parked any money, how come Rs 13, 701 got debited and from which account? Or bank automatically increased my loan amount and I will be charged EMI for the so called revised loan amount?
– My monthly EMI as per my instructions is 27,000. So even as per pro-rata basis, the amount does not come Rs 13, 701. I don’t understand this figure too.
– Why was that amount debited when my EMI payment is supposed to start on 25th April 2014 as told to me by SBI only? And this amount was debited on 31st March 2014, not on 25th day of the month as I had instructed to bank.
4. SBI personnel is telling me that ATM cards are not issued to MG accounts; that’s been stopped. Is it correct?
5. Now the branch manager of loan serving branch is forcing me to transfer my existing SBI saving account from some other branch to his branch. He is saying that it’s mandatory to have a saving account and MG account in the same branch. Is it the case?
6. I had applied for 10 years tenure. According to all calculations done by SBI personnel, I could be offered loan of 33,00,000 for 10 years tenure but I have availed just 19,71,797. Someone in SBI did a mistake and my loan tenure in the system shows 20 years. SBI personnel told me that it cannot be changed now and I can start paying higher EMIs to finish loan in 10 years as intended. So I asked them to set my EMI to 27,000.
– Can I change the tenure to 10 years now?
– How would I know my actual EMI? In HDFC they used to show the revised tenure and EMI whenever there was change in interest rate?
Thanks once again.
Dear Amey, as your sanctioned loan amount was 20.1L Rs. and actual disbursal was 19.7L Rs. hence the undisbursed 40K Rs. was your available balance. The interest of 13K is charged on the disbursed loan amount for the no. of days in March, you use the loan amount.
The 60K parked by you as surplus amount ‘ll bring down your interest outgo.
You can link your existing SB account debit card with Max Gain account.
SB account and Max Gain account can run in different branches.
For 10Y v/s 20Y loan term issue, please raise the same with RACPC people or the AGM loans RACPC and you ‘ll get positive reply.
Thanks
Ashal
Wow.. What a quick reply! Thanks! Can you throw some more light on these questions of my post:
– Was I actually short of money? When I had not parked any money, how come Rs 13, 701 got debited and from which account? Or bank automatically increased my loan amount and I will be charged EMI for the so called revised loan amount? Or is it the case that, it’s just ‘showing up’ that figure but actually deduction will start on 25th April only without charging me ‘interest on interest’ assuming i was short of money?
– Why was that amount debited when my EMI payment is supposed to start on 25th April 2014 as told to me by SBI only? And this amount was debited on 31st March 2014, not on 25th day of the month as I had instructed to bank.
One additional question:
– Is it mandatory have SBI saving account anywhere to get MG loan?
Dear Amey, I think you missed my original reply. the 13K figure is the interest to be paid on 19.7LR.s disbursed loan amount for the days you used the amount in March. So this 13K figure is debited from that undisbursed loan amount of 40K Rs. Please do note the interest deduction ‘ll happen only on the last day of each month in Max Gain.
No matter EMI is paid or not, Interest ‘ll be debited on the last day of the month.
No Having SB account is not a precondition to avail Max Gain. One may pay EMIs from non SBI accounts. Specially if salary accounts are with other banks, SBI indeed insists to debit EMIs from those salary account.
Thanks
Ashal
Dear Ashal,
Thanks. I understood that part but i wanted to ask this:
– Since 13K is deducted from the undisbursed loan amount and it was not ‘my money’, does that mean that my loan amount will considered to be already disbursed amount + 13K? And I will be charged EMI on that amount henceforth?
– “No matter EMI is paid or not, Interest ‘ll be debited on the last day of the month.” confused me. How interest can be debited when I have not paid EMI (transferred money)? From where will they debit money if lets say Available Balance is zero? SBI’s overall account statement is confusing.
Dear Amey, your loan amount is 20.1L (sanctioned amount) not 19.7L (the disbursed amount). So you are paying EMI for 20.1L for 20Y period.
Being Overdraft account, interest ‘ll be added to your book balance in case of no money and next month, you ‘ll be paying interest on loan + add on interest of prev. month.
Thanks
Ashal
Hi Ashal,
I have a basic query .The EMI was credited to my MG account on 5th March and correspondingly the DP got reduced . On 31st March , the interest portion got debited . Now my question is regarding the principal portion.. does it remain in the MG account only? Because I see a decrease in the DP , but there is no deduction of principal amount.. thanks in advance for your help.
Regards
Kumar
Dear Praveen, the reduction in your DP on EMI day is the loan repayment.
Thanks
Ashal
Hi ,I have aMAX GAIN account , now final disburshment is over.
Need transcation rights on my SBI OD account. what all documents we need to provide ? do we get any letter from RACPC ? Please guide me the procedure for the same.
Dear Ajay, please visit your loan serving branch and demand transaction rights for your Max Gain account. No special set of documents is required. At best if staff demands, you may produce the final receipt as proof of money received by your builder. If you were already holding viewing rights, then the branch manager only needs to click the flag in the system to award transaction rights to you.
Thanks
Ashal
Thanks a lot Ashal, Yeah i do have viewing rights and parked some money as well to OD account as it was linked to my SBI savings account.
As you said i will take one letter from builder for final reciept of all the money.
Once again thanks!!!
Dear Sir,
I oepned SBI Maxgain Home Loan with sanctioned limit for 30 L last year on an underconstruction property in Gurgaon.
Total cost of property is 45 L (excluding Service Tax and Registery charge).
Possession date is not yet clear as the construction is going slow. Written Date in BBA is middle of 2015.
Following transactions have processed towards property payment:
19 Lakhs Paid to builder from my pocket
10 Lakhs paid to builder using SBI Maxgain Home Loan
1 Lakh Interest amount on Moratorium period to Bank
Total 29 lakhs has been cleared to Builder.
16 Lakhs demnand is yet to come builder in coming months (Which I anticipate would be cleared in regular installments every of 3-4 months since the construction of property is in progress and looking at the rate of construction last year.)
Now my concern is following:
a) My understanding is that SBI will start the full EMI on Sactioned limit from July’14 which would be in range of 30 to 32 thousand on sanctioned amount.
b)However my My current disbursal from SBI is 10 Lakhs only. My thought is, in normal Home loan sceanario, EMI should come in the range to 9 t0 10 thousand rupees. Which would avoid me from upfront liability of high cash payment from my current capital.
I am expecting some surplus amount 2-3 lakhs from my salary year. Which i intend to pay to reduce the EMI.
My question:
Should I switch SBI Max gain to Normal Home Loan where I am paying the EMI basis on disbursed amount only? is SBI allow to switch from Maxgain to Normal Home Loan.
is Normal Home Loan more benecifal for my situation.
I am sincerely looking for your advice as vital help as what is beneficial for me to do?
Please advice I am confused.
Thanking you very much in anticipation of timely reply!!
Dear Amit, first a shock for you, Conversion from Term loan to Max Gain is possible but reverse is not possible. Now coming back toyour query, if you are not opting full EMI till possession, final EMI ‘ll be higher than 32K amount. The reason, available period to repay your loan is not 20Y now but somewhere 17-18Y. So obviously you w’d have to pay higher EMI in this case. I’m unable to understand the logic of conversion that you want to prepay 2-3L Rs. every year. Once possession is with you, the same amount can be parked in Max Gain to reduce your interest outgo and still having the liquidity in your hand. Is it not a good option that the one you are asking for?
Thanks
Ashal
Thank alot for such a quick reply.Pl bear with me to answer following further questions:
is it possible to switch from SBI to Other bank loan which could offer me Normal Term Loan?
The reason being I do not want to pay the interest rate on the amount which is not yet disbursed to me.This will help me to ease my cash liability since EMI is high with SBI max gain on total sanction amount.
Could you pls advice with few products from available bank to suit my requirement.
Unfortunately I find that SBI MaxGain is not proving beneficial for me.I think SBI Max Gain is suitable for those who want upfront downpayment of full loan amount.
I want to pay EMI for disbursed amount only.
My payment is 10 Lakhs till now. I need another 12 lakhs max from Bank in phases only over a period of 1.5 years.
Pl advice!
Sir – Sorry to bother again. You help will do wonders to me in taking conculsive step to save me in.
Pl help.
Dear Amit, who said it that you w’d have to pay interest on non-disbursed amount. For example if only 19L Rs. are disbursed as of now in your loan out of 35L Rs. loan and you are paying full EMI, the principal part of your EMI’ll be adjusted towards basic loan as per your loan amortization schedule and it help to bring down your drawing power. Out of the interest part of EMI, only 19L Rs. related interest ‘ll be deducted. Balance amount ‘ll become part of your available balance and it’ll help you to save interest outgo next month.
Thanks
Ashal
I am feeling very relaxed with this response 🙂 You are great. I am very happy to have you.
Thank you so much. I think I have been misguded by people. It was totally misleading. EMI calculators showed interest on Sanctioned Loan Amount. I did not see any provision in to calculate the interest on Disbursed amount.
1. Can you guide with an example calculations showing the values of following different components in EMI for following
Approved Loan Amount: 30 L
Disbursed Amount is 10 L
What will be principal and Interest amount in 1st EMI in this case?
2. Would be great if you send me calculator to me?
2. SBI guys refused to send me their EMI calculator.
Can you guide me if there is forum in SBI where I can raise my
complain?
Dear Amit, I can answer your query but I want you to do some home work first. For your given example, if full 30L Rs. loan is disbursed in single shot, what ‘ll be the EMI for a 20Y loan at the rate of interest of your choice?
Thanks
Ashal
Dear Amit, a little help for EMI thing. Please open an exl. sheet in your PC/laptop and then open loan amortization template in it to calculate your loan EMI for my query.
Thanks
Ashal
Hi Ashal,
I recently applied for MG loan and was sanctioned the same. The first partial disbursement is done and i had transfered some amount to the OD account. Since the final disbursement is not done i was expecting that i would not be able to withdraw the same. However i am able to do so.
Have you seen this happening for anyone else as well?
—
Nikhil
Dear Nikhil, do not worry, SBI do has few exceptions and you are one of them. I do have prev. few examples with me. So relax. 🙂
Thanks
Ashal
Thanks Ashal for such a quick reply.
—
Nikhil
Dear Nikhil, it’s my pleasure.
Thanks
Hi ashalanshu, i have a query, i have 25L of MG A/C and i have 5L in hand that can be parked, however i am confused in 2 option MG and FD, i am going to keep this money aside for long term (10yrs 9% p.a), i know in 7-8 yrs the 5L FD would go near 10L but if i parked the sam in MG then it would be 5L aftrer 7-8 yrs right? am i saving about 5L interst in 7-8 yrs ? MY MG details : Loan AMt 25L int. Rate 10.3 EMI 23400/- please suggest which option is best..
Dear Kailas, please do note in case of Max Gain it’s negative compounding whereas in case of FD it’s positive compounding. So after few years if you compare the 2 options, The money in FD ‘ll be more. Please consider the post tax earning from FD in your calculation to reach a final conclusion.
Thanks
Ashal
Hi Ashal,,first of all Many thanks for the help & suggestion, u r providing.
I am also having the same question like kailas – I am having FD of inr 5 lacks & my Home Loan amount is 29 lacks which was sanctioned on Nov30 @Intrest rate of 10.30 % & I have paid three EMI of INR 28179 for three months tille ie. 14Dec,14Jan & 14Feb.
Is it advisable for me to dissolve those FD of 5 lacks & put it into OD account ?
Dear Vivek, if this FD is part of your emergency funding, you should park it in Max Gain.
Thanks
Ashal
Dear Friend,
I have SBI Max gain account, just few days back bank has disbursed final amount, now could you please tell me whether OD account will get activate automatically or I need to submit some some form? I am not getting any positive response from SBI bank. Really not sure how I can do this process fast, any help on this will be highly appreciated.
Dear Mohammed, do you have existing SB account in SBI or not? if the answer is yes, please check with your existing account’s netbanking, in all probability your Max Gain is linked there.
Thanks
Ashal
Dear Ashal,
Thanks for the reply.
I have one SB account to which I don’t think it is not linked to max gain, however when i logged into onlinesbi I can see 2 accounts and I could see this message ” You are on viewing rights. If you want transaction rights, please contact your home branch.”
Dear Mohammed, please contact loan serving branch to get transaction rights for your OD (Max Gain) account.
Thanks
Ashal
Hi Ashal,
Nice article about Max Gain Home loan. I have watched your 2 videos about the same.
I have a couple of queries regarding this.Please find my questions below.
1. I was under the impression that the interest saved due to parked surplus amount will be adjusted towards principal and thus every month principal amount gets reduced. But from the video, I understood that the interest saved would be added to the account as available balance. I am confused. Can you elaborate on this more.
2. Let us say if I park some amount (say 5L) and from then I dont do any transactions in this account. So, every month I would be getting interest gain on the parked 5L right.
Dear Satish, this thing is already elaborated in my video as well as article above. For example purpose if you have parked 500000 Rs. and say your interest is 5000 Rs. towards this 5L Rs. in your EMI, this saved interest ‘ll not be adjusted towards Drawing Power. It ‘ll be added to your already available surplus of 5L Rs. and thus for next month, the new Available balance ‘ll be 505000 Rs.
Thanks
Ashal
Hi Ashal,
I have few queries on my SBI max gain account statement. I see debit interest transaction in each month (30 or 31st date) and the amount is not same. So is this the interest amount I am paying as part of my EMI? Also, If I have parked some amount in OD, should this niterest amount get decreased in each month?
Can I email you with my statement for more detailed questions?
Thanks,
Radhika.
Dear Radhika, in an OD account loan, the interest is not charged on the EMI credit date. On the EMI credit date, the principal is adjusted but interest part remain as it is. Now on the last day of the month (which may be 28-29 for Feb and 30-31 for other months), the interest is calculated and charged on book balance for each day of the month.
You may mail me your account statement. Please feel free to discuss your issues with me.
Thanks
Ashal
Thanks a lot for quick reply. What is your email id?
Dear Radhika, please check your e-mail for my test mail.
Thanks
Ashal
Hi Ashal, Is the interest component added to the Available Balance after EMI is deducted and actual interest incurred then deducted at the end of month?
Thanks
Praveen
Dear Praveen, to understand the answer of your query, please check my 2nd Video on Youtube.
Thanks Ashal.. I saw the video.. nice presentation .. You were explaining the case of AB= DP .. does the same scenario apply when AB not eq to DP ? Interest component is added to the Available Balance after EMI is deducted and actual interest incurred is then deducted at the end of month .. hope I am correct ..
Dear Praveen, yes your understanding is correct.
Thanks
Ashal
Hi Ashal,
Very informative article .. Helped me a lot to understand and I opted for Maxgain account last week .. Thanks..
One query I have is regarding putting funds into the account during partial disbursement period.. After reading your article, I understand that Avl Balance and Book Balance will change when we put in funds into the account .. How does the system identify my funds apart from the undisbursed amount in Avl balance? Also after the final disbursement is made, there will be some Avl balance left .. So does the system automatically understand that final disbursement has been done .. or do we have to go to bank and inform that final disbursement is over?
Dear Ajay, thanks for writing in. Please do note in SBI Max Gain, interest is always charged on book balance. Now the inbuilt formula in SBI’s banking software is very simple.
Book Balance = Drawing Power (your sanctioned loan amount) – Available balance
Now for your given query, Say you parked 1L Rs. in your Max Gain account after a partial disbursal. So what ‘ll be your available balance now? In this case your Available Balance = non-disbursed loan + 1L Rs. parked by you.
Accordingly Your book balance = Drawing Power – Available Balance = Disbursed Loan amount – 1L Rs. parked by you.
Hence you ‘ll pay less interest. So no need to inform any where regarding the calculation.
Thanks
Ashal
Thanks for the help Ashal… One more query is that my EMI will be starting on Mar5th 2013 .. So for the month of march , there will be an entry with debit of interest amount in maxgain acc? Could you let me know the transaction entries that would normally be present in Maxgain Account during an EMI month ?
Dear Ajay, before March, you w’d have to pay interest for Feb 2014 also. So please park surplus amount which is equal to your interest outgo in Feb. else the interest charged in Feb ‘ll become part of your book balance and you w’d have to pay interest on interest.
For actual account entries, please wait till 1st April 2014.
Thanks
Ashal
Hi Ashal,
I have a SBI Surakshit home loan from SBI.
I have two queries. Could you please help.
My a/c Limit: 2448000
Drawing power: 23,55,535
Outstanding amount:23,76,608 (before Jan EMI)
Outstanding amount: 2353258 (After an emi of 22350 and additional 1000)
My outstanding amount reduced after EMI but not Drawing Power. Why? even the additional 1k i paid reflected in outstanding but not in drawing power.
Could you please explain the difference between Drawing and Outstanding in this case. and how can i reduce it?
Also my interest out flow was as follows (There was no change in EMI or interest during these periods). Why did it increase?
Oct 31 – 20324
Nov 30 – 19823
Dec 31 – 20542
Thank you very much for sharing the knowledge. It is of great help. Thanks,
Rajni
Dear rajni, thanks for writing in. Can you share your loan account statement in excel to me? I want to check on my own before making any comment.
Thanks
Ashal
Hi Ashal,
Mailed you my a/c statements.
Regards,
Rajni
Dear Rajni, I confirm the receipt of the mail.
Thanks
Ashal
Hai, I hav a loan of around 7 lacs with SBI MG and I hav parked 100% loan amount in MG account. Now my interest became zero but Should I still pay EMI, will my drawing power reduce every month….
Thanks in advance
Taj.
Dear Taj, the EMI ‘ll remain same and continue but the interest part of your EMI ‘ll be available to withdraw on the date of EMI credit itself. The drawing power ‘ll come down as per your loan amortization schedule.
Thanks
Ashal
Thanks for your reply, but my drawing power is not going down. I would like to know whether it will become a problem for me during later stages, should I contact the bank for that or leave it as it is…….
Thanks,
Taj.
Dear Taj, you mean to say, there is no change in your Drawing Power for past few months? Or the change is very little than you expected it to be?
In case there is no change at all for past few months, you need to contact your loan serving branch.
Thanks
Ashal
Yes, I changed my home loan account to MG account last Nov. but from then there is no change in drawing power….It looks some what vague… that y i asked ur opinion…..
Dear Taj, what is the reply from SBI staff? It seems there is moratorium period in your loan, due to which Drawing power is not reducing.
Thanks
Ashal
Sorry to pile on Taj’s request…if I am paying full EMI on a partially disbursed loan, will the loan amortization schedule be based on disbursed loan amount or the full loan amount (i.e., Drawing Power)?
I am asking this question because the principal is deducted based on the amortization schedule, which in turn depends on disbursed loan amount vs. DP.
Dear Rajesh, please confirm the reduction in your DP. If DP is reducing, you are repaying loan and thus your loan term ‘ll come down.
Thanks
Ashal
Dear Rajesh, in partial disbursed stage, if your DP is changing, the loan term ‘ll come down as you are paying full EMI from day one.
Thanks
Ashal
Hi please do clarify my few queries on SBI max gain for a under construction flat
1. Can there be a co applicant for the loan or needs to be a single applicant, specifically for the max gain
2. Does the co applicant should be co buyer in the sale and construction agreement
3. And i was told by the personnel that SBI will loan a additional amount apart from the sanctioned loan for my life insurance. I have taken life insurance from LIC already. Are they pushing it along with the home loan or is it a mandatory process.
looking forward
Dear Raj, there can be co-applicant in Max Gain. The co-applicant need not to be the buyer but it’s better to keep co-applicant as buyer also, if the idea is to maximize the home loan related income tax benefit. if you are already having sufficient term cover, you may deny the mortgage term cover called as Rin Raksha from SBi Life.
Thanks
Ashal
Hi thanks for the info, do clarify my few more queries
1. Can i capitalise the interest during the moratorium period in max gain
i.e. take a complete payment holiday for 12 months and then start the emi including the interest for that period
i was told that this option is not available for max gain and is only applicable for normal term loan. is it so?
2. The interest rate at SBI is said to be 10.15% for below 75 lacs wef from 20/12/13 as on their web page.
But as i conversed with the branch i was informed it is 10.5% for a 70 lac loan amount.
3. And the Rin riksha SBI insurance is said mandatory by the manager, do you suggest any other alternative or to take the same
looking forward
Dear Raj, you can not stop interest payment in Max Gain. You w;d have to pay it, even during partial disbursal stage.
Please inform the interest rate from website to your branch. The life insurance is not at all mandatory if you are already having life insurance more than loan amount. You need to fight it out for yourself.
Thanks
Ashal
Hi thanks for all the wonderful replies, got one more query
I am applying for a max gain of a under construction flat.
I was asked for a interim security till the completion of the flat, which i understand to be a routine procedure.
But now i am told that the property given for the interim security will be equitable mortgaged till the completion of the flat. Is this a necessary?
Dear Raj, normally SBI does not ask for any other mortgage than the property on which the loan is granted. If it’s due to some recent developments within SBI, I can not comment. Please check with some other branches of SBI or talk to RACPC people directly if you have moved your file already.
Thanks
Ashal
Dear Ashal,
I have a KVP for 5 lacs completed 3 yrs of its 8yrs 7 m, should i park it to Maxgain to avail a better benefit.
Btw i hav my home loan @ 10.15% for a 20 yr tenure starting this month
Thank you
Dear Raj, yes you can park your KVP redemption amount into Max Gain. Actually it ‘ll also save you from your income tax liability on KVP interest every year.
Thanks
Ashal
Hi Ashal
I understand the long term home property insurance is required following a SBI Maxgain loan of 72l for a under construction flat.
In regard to that, i would like to know what should be taken as the sum assured?
1. Total cost. [Sale consideration + Construction cost]
2. Construction cost
3. Loan amount
30k has been debited for the same from my loan ac
Thank you
Dear Raj, if you had not mentioned clearly with SBI, in your case the property insurance is meant for loan amount and valid till loan term
Thanks
Ashal
Hi Ashal, Need a clarification in regard to the drawing power.
Sanctioned Loan Amt: 72,00,000
Book Balance: -47,30,868.00
Available Balance: 24,54,995.00
Limit : 71,85,863.00
Uncleared balance 0.00
Drawing Power 71,85,863.00
This is my first month post the partial disbursement.
31-Mar-2014 DEBIT INTEREST 30,735.00
29-Mar-2014 DEBIT htl insur pre 30,711.00
27-Mar-2014 TO HTL TR 5,22,422.00
06-Mar-2014 TO REIMBURSEMENT 41,47,000.00
1. Why is the drawing power and the limit is reduced from 72L ?
Thanks
Dear Raj, without a single EMI payment, Drawing power should not come down. It has been an error by SBI’s software. Please contact Loan serving branch to get it rectified.
Thanks
Ashal
I am afraid tat my loan serving branch will get this point as i am the first MG customer of the branch, big thanks to you Ashal, I always take support from here before talking to the branch.
1. In case after full disbursement,
Full EMI = Principle + Interest
The DP will reduce from the principle portion of the full EMI.
2. In case of partial disbursement,
Full EMI = Excess amount + Interest on disbursed amount.
So, the excess amount will be reflected in the AB and BB.
The DP will be remain the same until full disbursement, as till this stage, the excess amount in the EMI is not the principle.
Is my understanding correct?
Thanks
Dear in partial disbursal stage, EMI = Principal + Interest on disbursed amount + excess Interest.
This excess interest ‘ll become part of available balance. So yes, your understanding is correct. Interestingly in your case, the DP was reduced even before any EMI was credited to your MG account.
Thanks
Ashal
thanks Ashal
1.I am planning to pay the full EMI today. Should the DP needs to be corrected before the transaction.
2. How does the system know whether its the EMI or just a credit of funds, i mean parking some amount.
Only If its known as the EMI, then the principle portion will be accounted in the DP right? otherwise will it be a surplus amount in the AB.
3.The bank didn’t ask for any EMI date. They said just transfer the amount to the OD Ac.
How do i make sure the amount i m transferring to be the EMI and not a surplus.
4.If the emi calculated is 70199 post full disbursement, should it be the exact amount or can i round it off to 72k.
Sorry for making a lot of queries, thank you
Dear Raj, let me try to answer you.
1.I am planning to pay the full EMI today. Should the DP needs to be corrected before the transaction.
If you meant to return back to original loan amount as DP. OK. By the way, reduction in DP is good for you in the sense that now you w’d have to pay less interest as around 15K amount has been adjusted towards loan repayment.
2. How does the system know whether its the EMI or just a credit of funds, i mean parking some amount.
Only If its known as the EMI, then the principle portion will be accounted in the DP right? otherwise will it be a surplus amount in the AB.
The ECS or SI credit of EMI, itself triggers the system to calculate principal as per loan amortization schedule and same amount ‘ll be adjusted from EMI and accordingly your DP ‘ll also come down.
3.The bank didn’t ask for any EMI date. They said just transfer the amount to the OD Ac.
How do i make sure the amount i m transferring to be the EMI and not a surplus.
This is quite strange but transfer as of now and check the reduction in DP after 48 hours. If nothing happens, contact loan serving branch.
4.If the emi calculated is 70199 post full disbursement, should it be the exact amount or can i round it off to 72k.
Yes you can as in your case SBI has given you to pay EMI as per your own comfort and not on a mandatory date unlike others. 🙂
Thanks
Ashal
The days of initial conversation to sanction of the loan and till date, the process goes with clarity of your support Ashal.
Thank you so much. I am glad that i came across your blog.
Dear Raj, thanks for your praise. Please keep asking. 🙂
Thanks
Ashal
Dear Ashal,
Refering you post saying:
In partial disbursal stage, EMI = Principal + Interest on disbursed amount + excess Interest.
Can i correct it saying
EMI = Principal + Interest on outstanding (i.e. disbursed amount – excess amount) + excess Interest??
Dear Pramma, this ‘ll be the correct equation.
EMI = P + i1 + i2
Where P = principal amount to be repaid into loan
i1 = Interest on disbursed loan amount
i2 = Interest on non-disbursed loan amount
As the loan is partially disbursed, i2 ‘ll become part of available balance (surplus).
Thanks
Ashal
Hi Ashal,
Thanks for quick reply.
There is a slight change in my question. In same equation,
If i already have surplus amount S, how will it be accounted?
Is it like i2 in the equation will change to interest on (disbursed amount – S) ??
Thanks
Dear Pamma, If you have parked some personal surplus, it ‘ll bring down the disbursed loan amount for calculation of interest purpose. For calculation of interest, this S ‘ll impact your disbursed loan amount. Hence in my above equation, i1 ‘ll Interest on (disbursed loan amount -S).
Thanks
Ashal
How do I calculate how much I would need to pay (as of today) to close my MAX GAIN loan account?
Dear Amit, your drawing power is your actual as on date outstanding loan amount which you need to payback to close your loan account.
Thanks
Hi All..!!
This is susanta, I have Saving Account with SBI and got a maxgain account number while loan disbursement. (Home Loan from SBI).
I have salary account with HDFC bank. I am planing to do NEFT all the amount to my SBI saving Account after getting salary as I have given standing instruction that please deduct Home Loan EMI from my SBI Saving Account.
Question:
My question is, if i will keep all the amount in my SBI Saving Account whether I will get Maxgain benefit ? or I need to do NEFT from HDFC salary account to SBI Maxgain account to get Maxgain benefit??
Is there any charges applicable for internal fund transfer from SBI Saving Account to Maxgain Account and vis-a-vis.
Any one please help me on above queries..!!
Thanks and Regards,
Susanta
Dear Susanta, to avail the benefit of Max Gain, the money should be in OD account (Max Gain account) and not in SB account of SBI. Within SBI accounts,there is no charge to transfer money.
Thanks
Ashal
Sub : (Get transaction Rights of my Max gain)
Hi Ashal,
First of all I would like to thanks for quick reply.
Today (21/01/2014) I got final disbursement (all at once) directly to builder’s account.
In-order to get the transaction rights to operate my MaxGain account which is linked with my saving account whether I need to visit to RACPC or it will automatically activate?
Need your quick reply as I need to do NEFT from my salary account to max gain.
Thanks and Regards,
Susanta
Dear Susanta, for activation of transaction rights, please contact your loan serving branch immediately.
Thanks
Ashal
hello,
I found your page very helpful.
I just have applied for MG homeloan and my EMI will be starting from next month
I have a doubt here:
To get the benefit of Max Gain, the money should be in MG account (OD) and not in SB account of SBI and in my case ECS is setup for my SBI SB account
So,
1)Should I keep surplus amount in SB account or OD account?
2)Do i have to maintain balance in SB account even if there is surplus in OD account greater than EMI ammount?
Dear Dhruv, the surplus amount should be parked in OD account aka Max Gain account. Please do note, in case your loan is in partial disbursal stage, you can not pull out your own money as transaction rights ‘ll not be there with you till final disbursal.
The minimum balance requirement for SB account has been done away with in SBI a long back ago.
Thanks
Ashal
Thanks for your prompt responses.
Now I have MG loan approved 🙂 (amount 13lac/ period 8yrs)
Below is my OD account details:
Account Number XXXXXXXX
Account Type SBI H L MAXGAIN OD (DEC13)
Account Name XXXX and YYYY
Drawing Power 13,00,000.00 Interest Rate(% p.a.) 10.15
Balance as on 01/05/2014 0.00
Can you guide me what should i do now to save on my interest part? By when i should park the funds in the account to get the most out of it?
Please note that:
1. My first EMI will start on 5/6/14 (after 10 days from now)
2. Estimated possession- May 15
3. I am short of funds as i have to pay margin amount so cannot park more than 10-15k till June 14.
Dear Dhruv, as full and final disbursal has been done, you can ask for transaction rights from SBI. Once transaction rights are with you, you can park all the amount you have even for few days to get the benefit of lower interest outgo. Try to keep the money more time in MG account before giving/paying to other.
Thanks
Ashal
Dear Dhruv, as full and final disbursal has been done, you can ask for transaction rights from SBI. Once transaction rights are with you, you can park all the amount you have even for few days to get the benefit of lower interest outgo. Try to keep the money more time in MG account before giving/paying to other.
Thanks
Ashal
————————–
@Ashal
Construction is not completed then how bank can do final disbursement?
I don’t think that final disbursement has happened
Please see my book details after 2 days:
Account Number XXXXXXXXXX
Description SBI H L MAXGAIN OD (DEC13)
Name Mr. DHRUV
Book Balance -7,24,484.00
Available Balance 5,75,516.00
Limit 13,00,000.00
Uncleared balance 0.00
Drawing Power 13,00,000.00
Currency INR
Rate of Interest (% p.a.) 10.15%
Lien Amount 0.00
PS: I have added 500/- to the account yesterday
Dear Dhurv, in your prev. query, the drawing pwoer was there but ABand BB were not there. You quoted only balance figure as 0, hence I assumed that full and final disbursal has happened. As it’s still a partial disbursed loan, you can not get transaction rights. You may park your own money to bring down the interest outgo but can not withdraw the same in case of need.
Thanks
Ashal
Hi Ashal,
now my book is updated as below (on 1june)
Book Balance -7,26,903.00
Available Balance 5,59,413.00
Limit 12,86,316.00
Uncleared balance 0.00
Drawing Power 12,86,316.00
Last Transaction
31-May-2014 DEBIT INTEREST 2,419.00
I think something is wrong here..
Can you please help me find out?
Dear Dhruv, what’s wrong as per your own understanding?
Thanks
Ashal
Dear Dhruv,
Here are the answers to your question
1)Should I keep surplus amount in SB account or OD account?
=> Ashal as alreay give an answer
he surplus amount should be parked in OD account aka Max Gain account. Please do note, in case your loan is in partial disbursal stage, you can not pull out your own money as transaction rights ‘ll not be there with you till final disbursal.
2)Do i have to maintain balance in SB account even if there is surplus in OD account greater than EMI ammount?
=> You don’t need to exactly maintain balance in SB account, But you need to ensure that EMI amount is available in SB account before the date of EMI. Because even if you have surplus amount greater than EMI in OD account, the SBI will deduct EMI from SB account.
But Personally, I feel such functionality should be provided by SBI. Like if SB account (the account for ECS) doesn’t have sufficient money then it should recover EMI from OD account if there is Surplus amount. If both cases fails then defaulter.
Best regards,
Ganga..
Dear Ganga, recovery of EMI under ECs from OD account is not possible. Why? Actually your EMI itself is credited into OD account and on the same day, the loan is repaid from EMI’s principal amount. Interest part of EMI remain there till last day of month and same is adjusted as per calculation of interest on bok balance.
Thanks
Ashal
Why additional interested is debited to my account?
can you provide reason for this?and calculation of the interest also
Dear Dhruv, how did you come to conclusion that interest has been debited twice?
Thanks
Ashal
Hello,
After 2 months (2EMI’s of 19900) my account looks like below:
Account Number xxxxxx
Description SBI H L MAXGAIN OD (DEC13)
Name XYZ
Book Balance -6,93,023.00
Available Balance 5,84,195.00
Limit 12,77,218.00
Uncleared balance 0.00
Drawing Power 12,77,218.00
Currency INR
Rate of Interest % p.a. 10.15%
Lien Amount 0.00
Additionally 7.25L has been disbursed.
please advice me if all is well or not.
Any suggestions to save more???!!!
Dear Dhruv, the account is working fine.
Thanks
Ashal
Dear Ashal,
Many Thanks for your service of unravelling the myseteries within the Maxgain scheme, which though being a very good scheme has been poorly explained by SBI.
I have one question though, regarding online transactions. My Online transactions have been enabled about 6 months back and I have been able to view my account and transfer money from my SB A/C into my Max gain OD A/C easily. I wanted to check the reverse of being able to transfer from my OD back to the S/B A/C and find that the OD A/C is not an available option to transfer money from. I contacted my home branch via email and phone (since am based abroad) and their response was that the OD A/C has been transaction enabled.
Am I missing something? my expectation was to be able to also withdraw from my OD A/C Online.
Any ideas on what I need to do…
THANKS again for your services and the blog…
Venkat
Dear Venkatesan, are the 2 accounts in same branch or different branches? During your Transfer option window in SBI netbanking, the Maxgain account should come along with your SB account from where you can transfer toany account within SBI or non SBI account. Is it available there?
Thanks
Ashal
Hi Ashal,
The two accounts are in the same branch – Whitefield Bangalore,
I do not see the OD Account in my options as the From Account, I only have the SB Account available in the Transfer from, I see it in my Transfer to Option, where I have both the SB and the OD.
When I checked with the Branch they said that “transaction rights have been enabled”.
thanks,
Venkatesan
Please correct the name of the previous post to Venkatesan – my apologies.
Dear Venkatesan, it seems your CIF is not same for 2 accounts. Please confirm from your branch that CIF is common or different. If CIf is different, you need to get new netbanking login ID and password for MG account.
Thanks
Ashal
Hi Ashal,
Below is snapshot of my maxgain account..
———————————————————————-
Book Balance 23,485.00
Available Balance 23,45,398.00
Limit 23,21,913.00
Uncleared balance 0.00
Drawing Power 23,21,913.00
Currency INR
Rate of Interest (% p.a.) 12.0%
Lien Amount 0.00
Date (Value Date) Narration Ref. No. Debit Credit
31-Dec-2013 (31-Dec-2013) DEBIT INTEREST 1.00
—————————————————————————–
On 1 Dec I had made book balance 0. My EMI is 23,486.00.
On 31st Dec interest debited is 1.00 however no principal is deducted as I see 23,485.00 as book balance. Is this correct?
If I am not wrong 23,485.00 is available for withdrawal w/o effecting my interest outgo?
cheers,
mohit
Dear Mohit, as your book balance is zero, now you should debit this 23485 Rs. amount as you ‘ll not earn any interest on it.
Thanks
Ashal
Ashal very good article. Very informative..Cheers to you.
Thanks
Sureh
Dear Suresh, thanks a lot. Please feel free to ask your queries if any.
Thanks
Hey ASHAL,
A VERY INFORMATIVE ARTICLE. KEEP UP THE GOOD WORK
BUT THERE IS ONE THING I AM NOT ABLE TO UNDERSTAND IN MY MAX GAIN ACCOUNT.
MY APPROVED LOAN IS 27,20,000
1ST PAYMENT TO BUILDER MADE ON 6 NOV 19,00,000
I HAVE OPTED FOR FULL EMI. WHICH THEY SAID WILL BE DONE FROM DECEMBER
MY BANK STATEMENT IS AS FOLLOWS ON DEC 1ST
6. NOV – NEFT TO BUILDER 19,00,000
30 NOV – INTEREST 13,394
NOW BOOK BALANCE = -19,13,394
AVAIL BALANCE = 7,89,961
LIMIT = 27,03,355
QUESTION : HOW CAN MY AVAILABLE BALANCE BE SO LOW.
IF I AM NOT WRONG IT SHOULD HAVE BEEN 8,20,000 – 13,394 = 8,06,606.
Dear Chandru, believe it or not but SBI’s banking software makes mistakes in first month of your Max Gain loan. Either more amount towards principal ‘ll be adjusted (like your case) or less or no amount ‘ll be adjusted. Please contact loan serving branch to rectify the mistake if you want to. Interestingly as more money has been adjusted, so it means, you w’d have to pay lesser interest here onwards. My personal take, please park extra amount to make it a figure of 8.4L Rs. in available balance as interest for Dec month ‘ll be deducted from available balance on 31st Dec and ‘ll bring down it even lower.
Thanks
Ashal
Dear Ashal,
I have a doubt regarding the payment of interest towards the “MAXGAIN SURAKSHA”. I got the insurance when I opted for SBI Maxgain home loan. I took loan for 38.54L and insurance cost me 96K. The loan was sanctioned from Oct-13 and I paid pre-emi twice for the loan. The pre-emi deducted automatically from my SBI savings account, whereas the interest for the “MAXGAIN SURAKSHA” was not deducted automatically from my SBI saving account. Today I got an SMS that I have to pay Rs 815.00 which is due for the MAXGAIN SURAKSHA account before 21.12.2013. So need clarification regarding the meaning of Drawing Power, Outstanding amount, C.Y.YTD Interest and how to pay C.Y.YTD Interest, and how they calculated Rs 815.00 as interest for which I am not seeing any details in my SBI acc etc.
Description MAXGAIN SURAKSHA
Limit 96,000.00
Drawing Power 18,926.00
Outstanding Amount 19,224.00
Rate of Interest 10.5
Currency INR
C.Y.YTD Interest 212.0
P.Y.YTD Interest 0.0
30-Nov-2013 (30-Nov-2013) PART PERIOD INTER 164.00
31-Oct-2013 (31-Oct-2013) PART PERIOD INTER 48.00
23-Oct-2013 (23-Oct-2013) DEBIT TRANSFER
TRANSFER TO 30322777921 SBI LIFE INSURANCE CO 19,012.00
Thanks
Subhasis
Dear Subhasis, C Y YTD Interest stands for Current Year – Year to Date Interest.
Drawing Power is your sanctioned loan amount as of now and later on once you srart repaying your loan through EMIs, it ‘ll reflect your actual remaining loan amount.
To get the interest details, please check your SBI Surakshit Account (Insurance Prem.)
Thanks
Ashal
Hi Subhasis,
what is part period inter..?
I took loan from SBH 30L on Dec 12, in statment I saw debited on 31-Dec-2013 (31-Dec-2013) PART PERIOD INTER 16,767.00 . my emi is not yet started from Jan 6th-2014 it may start.
Dear Shiva, the loan amount was used by you from 12th Dec till 31st Dec. So interest is charged from you for this part period.
Thanks
Ashal
Given a choice I have break-even the amount in the MaxGain with Surplus, I’m fixing it difficult to decide to Close the loan or Keep it open?
Few concerns are, since EMI amount is till same, my eligibility to get another loan is reduced.
We see lots of technical glitches in SBI where they end up collecting some arrears which were never foreseen or understood.
Also if it is my primary house, why would I keep the documents with SBI. Rather close the account and physically own the home.
What does your wisdom suggest? What would be most prudent thing to do in this situation?
Dear Shashi, are you referring to another home loan after closing this Max Gain?
Thanks
Ashal
Hi Ashal
I have a SBI Maxgain account. We moved to the US after the loan was fully disbursed and our EMI has been running for nearly about a year. I have some surplus funds and would like to park it in my maxgain account.I have transaction rights for the account.
My questions are:
1. Can I set up a third party transfer from any SB account to this maxgain account? Or I can effect a transfer only from a SBI SB account to this SBI maxgain account?
2. Can I transfer dollars directly to the SBI maxgain account? Will that have an extra fee involved?
3. While adding a beneficiary in the third party transfer from my non-SBI account, it asks me what kind of account(here SBI maxgain account) I will be transferring the money? So do I enter loan account or OD account?
My SB accounts are ordinary SB accounts and not NRI or NRE accounts.
Thanks in advance. I am following your blog and it has every query beautifully answered. Kudos to you.
Lavanya
Dear Lavanya, thanks for writing in. I’m trying to answer your queries.
1. Can I set up a third party transfer from any SB account to this maxgain account? Or I can effect a transfer only from a SBI SB account to this SBI maxgain account?
You can set up 3rd Party Transfer from any other bank acount in India to Max Gain OD account. I’m using my own icici and IOB bank accounts to transfer money into Mg OD account.
2. Can I transfer dollars directly to the SBI maxgain account? Will that have an extra fee involved?
Yes, you can directly transfer Dollor after conversion into Indian currency to your MG OD acount. As far as I know usual banking fee ‘ll be there just like you transfer to other bank account sinto India.
3. While adding a beneficiary in the third party transfer from my non-SBI account, it asks me what kind of account(here SBI maxgain account) I will be transferring the money? So do I enter loan account or OD account?
Mark it as OD account.
Thanks
Ashal
Thanks So much Ashal.
Lavanya
It is an interesting review with detailed information. SBI should learn such a method of communication.
I had a maxgain loan of 16L which I paid recently. However, in the following month EMI was withdrawn from saving account as usual maning that my available balance is higher than the limit. I therefore have some questions related to this:
1) Do I get interest on the additional EMI’s that would be deposited in maxgain account?
2) In near future I would be interested in another property and therefore a new loan. Can I use this maxgain account to purchase another property? This will reduce all documentation efforts.
3) If I point 2 is yes, how long I will be able maintain my maxgain account idle – no EMI deposition and/or withdrawl
Dear Manaka, what did you mean by paid 16L Rs? I assume you have parked the surplus amount equalt to your drawing power. Now in this case, regular EMI ‘ll continue and the interest part of your EMI ‘ll keep added up into your existing surplus balance balance. you ‘ll not earn any interest on this add on surplus. So on the very same date of EMI, please remove the addon surplus and keep the amount matched with your as on date DP.
Thanks
Ashal
Thanks Ashal for your reply. I had drawing power of 16L, of which, I partially withdrawn for my work and parked it Max gain account when I had some additional income. Now, the surplus amount is bit more that drawing power as I paid an additional EMI. Now I will remove the surplus. Could you please let me know if I can use this maxgain account, assigned for a particular property, use to buy another property. Besides, how long I will be able maintain my maxgain account idle – no EMI deposition and/or withdrawal
Dear Manaka, officially your Max Gain loan is not closed, hence your next loan eligibility ‘ll be impacted due to this. So to get new loan, you need to preclose Max Gain officially. that means you w’d have to forgo your parked amount.
Thanks
Ashal
Hi Ashu,
Do we have to pay tax for the amount in OD ?
One correction ,do we have to pay for the interest earned for the amount in OD ?
As per your example if i park 2L in OD i get 1.6K per month as interest, do i have to include in my income ?
Dear Sridhar, you are not earning 1600 Rs. but paying less by 1667 Rs. as interest on your home loan. so paying less interest does not mean, you need to pay tax on this 1667 Rs. This is not your income. It was your money already.
thanks
Ashal
Thanks Ashal. Will the interest certificate show lesser interest with maxgain vs no maxgain ? So if the interest shown is same then it seems i can claim tax benefit for the interest which i have not paid or paid less ?
Dear Sridhar, SBI ‘ll release only the actual deducted interest by it. so your tax benefit ‘ll come down as and when you are parking kore and more surplus balance.
Thanks
Ashal
Thanks Ashal, Makes sense.
Dear Sridhar, No, you are not earning any income, hence question of paying tax does not arise.
Thanks
Ashal
This is really a good piece of information enlightening on all the aspects of Home loan and associated accounts. I just have one question. Recently, my loan amount of about 17L is disbursed and Maxgain A/C limit approved is 70,000/-. Is there any way to increase this approved limit? Or is this decided by bank before the loan processing?
Dear Amey, can you share your account statement with me?
Thanks
Ashal
Hi Ashal,
This is a wonderful article – thanks for sharing the information. I have a query of my own for you:
I had got a loan sanctioned from SBI with Max gain scheme for 25 years with 18 months moratorium period. I have disbursed almost 80% of the sanctioned amount and now since the builder is delaying the demands and I have sufficient funds to meet the future demands I want to:
1. Reset the EMIs to the actual loan amount disbursed within the moratorium period itself (11 months have completed as of Nov 13).
2. Avail the max gain overdraft facility (Right now OD account is one way only).
Can you please tell me if its possible to do so before the builder offers the possession? If its possible then how should I proceed?
Thanks,
Kamlesh
Dear Kamlesh, instead of paying builder from your own pocket, park that amount into max Gain and save interest outgo even on 80% disbursed amount. if liquidity is an issue, park a paryt amount. If you are going to pay builder from your own pocket, this 20% ‘ll not be there with you over the period till possession, then how ‘ll you reap benefit from it?
thanks
Ashal
Hi Ashal,
very good post and tank you very much
I need a clarification regarding Max gain EMI deduction date.Suppose if I select date 5th or 10 th or 15th for EMI dedcution will it make any difference in long term? Is there any advantage of selecting 5th instead of 15th?
Dear Jayraj, the date ‘ll play a very little role in bringing down your interest outgo oif it’s 5th over 15th. As your own money meant for interest ‘ll remain for 10 more days in MG account. over the long duration, this may translates into few thousands rupees.
thanks
Ashal
Hi Ashal,
Wish you a very happy Diwali!!
Great Article!!! And really appreciate that you answer all the
‘endless’ queries, which themselves clear many doubts. Still, let me extend the ‘end’ further with my specific queries
I transferred my HL to maxgain from LIC. I received the disbursement check on 28 Sep 2013 from SBI. My MG account statement shows Debit interest for the three days (28, 29, and 30). However, they increased my book balance (made more negative), made the available balance negative, and increased the drawing power too, by that interest amount on 30 Sep 2013. I had signed ECS clearing form and completed all the formalities associated with ECS such as signature verification and S/B account bank stamp etc. at the time of submitting application form itself. I hold S/B account with a private bank.
Further, on 5 Oct 2013, the day of EMI deduction, no EMI was deducted from S/B account (no transaction seen on my account statements either). When asked a concerned person in loan servicing branch (he is assistant manager), I was told that EMI deduction will start from next month as full month has to be completed. On raising doubts over this logic, I was told that he is AM and has processed many MG cases.
On 30 Oct 2013, my book balance was again increased (more negative) by interest amount for the full month, which as per your comment above, was for interest on outstanding book balance. Accordingly, available balance was made more negative and drawing power was also increased. On 5 Nov 2013 also, no EMI was deducted. So I again visited the same person, since he is the only person in the branch who knows at least something about MG and everyone else, including the chief manager, directs to him only. He told me that ECS process takes 3-4 month as it has to be routed through the private bank (with heavy stress on words “pvt bank”) and RBI. He asked me to deposit the extra amount to MG account as EMI. When asked how MG A/C will consider this as EMI, he told me that we do it at the back end. Although I have doubts about what he told me, I have transferred the amount to MG as per the instructions by him and made the available balance just positive for time being. And not convinced with all the proceedings, decided to hit the queries to you.
– How come the book balance (in negative) and drawing power increased beyond the total disbursement amount and consequently, the available balance became negative? As per my understanding from the article, maximum drawing power is the sanctioned/total disbursement amount. Am I wrong here?
– Does ECS activation really take 3-4 months for SBI? For LIC, it was done in 1-2 working days. If yes, how should I make sure to pay EMI regularly? If no, what corrective steps do I need to take for ensuring ECS is activated quickly?
– Also, I think, I am charged extra interest during Oct 2013 for the debit interest to MG on 30 Sep 2013 due to no EMI deduction on 5 Oct 2013 despite clearing all the formalities of ECS well before receiving the disbursement. Am I correct? Can I raise this issue somewhere?
– Can they adjust fund transferred to MG as EMI at the back-end and that too, retroactively? If No, will my CIBIL score be affected?
– And finally, can we opt for EMI deduction from MG itself so that such situation does not arise in future?
Thanks in advance for the answers and your time. And apologies for the long story. 😦 Wanted to make the issue clear to the future readers too
Dear Mayur, I doubt some serious issues are there in your EMI ECS mandate and you may not get it even in Dec. ECS does not take that much time. personally I w’d like you to open a SB account in SBI itself in the same branch and routed your EMI from it. it ‘ll save a lot of pain for you.
Thanks
Ashal
Thanks Ashal for your reply.
I will open a SB a/c in SBI and route ECS through that. However, can you please guide me whom to approach to get the clarity on what exactly is happening about EMI ECS? As in if there is a central authority (like RACPC) or customer service center? Because (from my experience over the past 1.5 months) I dont think that anyone in the branch has much idea about the product and definitely not about the problem I am facing.
Also, can you please tell me if my CIBIL score will be affected by this? and the last, if we can opt for EMI deduction from MG itself?
Dear Mayur, you can not opt for EMI deduction from MG account itself. There seems some internal issue for ECS mandate and only SBI people may answer it.
Thanks
Ashal
Dear Ashal,
Firstly, Fantastic article. Very useful information.
I have a query. If you look at the below information of my Max-gain HL account, you will see that first EMI was scheduled in the month of AUG. However, interest has been debited on 31 JUl. Is this how its suppose to happen? Also any idea what is “SLOP charges” ? Manager at my home branch (SBI) has asked me to conenct with RACPC for details.
Date Narration DETAILS
31-Oct – DEBIT INTEREST – 30,287.00 (DEBIT)
11-Oct – EMI3 – 35,029.00 (CREDIT)
7-Oct – SLOP CHARGES FOR HARISH M – 1,000.00 (DEBIT)
30-Sep – DEBIT INTEREST – 29,182.00 (DEBIT)
11-Sep – EMI 2 – 35,029.00 (CREDIT)
31-Aug – DEBIT INTEREST – 30,085.00 (DEBIT)
12-Aug – EMI 1 – 35,029.00 (CREDIT)
31-Jul – DEBIT INTEREST – 29,061.00 (DEBIT)
3-Jul – TO TRANSFER (FRANKING CHARGES) – 780.00 (DEBIT)
2-Jul – TO TRANSFER (TO BC HL DISB) – 35,00,000.00 (DEBIT)
Thanks,
Naveen
Dear Naveen, the interest is in July for disbursed amount is charged on 31st July, so that is correct. Normally SLOP charges WORD is used to debit amount if any wrong debit entry for less than actual demand was made from your account.
Thanks
Ashal
Dear ashal,
Your blog on max gain is fantastic. Should I say I have become addicted to your posts.
Now I have a doubt on mr. Naveen’s statement. Since the loan is on reducing balance, why is the interest outflow not reducing? August interest is more than July, though September is less. But again oct is more. Initially I thought it could be due to 30 or 31 days in the respective months used for interest calculation. But that doesn’t explain why oct interest is even more than August?
Dear Chandra, thanks for writing in. July interest was for less than 31 days as main disbursal happened on 2nd July, one day less. Now interestingly, dear Naveen did nothing for July’s interest which debited from the account and thus the opening loan balance in August and subsequent months went up by July Interest amount. Now in the month of Oct, there was a Slop charge of 1000 Rs. and this is the reason of a bit higher interest in Oct over Aug. Hope I’m able to clarify your queries.
Please feel free to ask.
Thanks
Ashal
Hi,
I have two questions.
I would like to know few things on these product. At present I have opted for max gain and they have sanctioned loan up to 55% property value. Since it was take over from LIC, they have told me that as per policy they can lend only up to 55%. Also the property is under construction. I have already paid approx. 36% of total value from my own capitol. At present I need some fund for the interior. Can I request SBI to reimburse the amount since I have paid more than 20%. Do you know the process for this ?
Also they have sanctioned some amount of interiors. Sanctioned fund is including interiors. Property is not completed yet. Since I getting it done furniture in advance, do they release fund for interiors ?
Regards ,
N Shenoy
Dear N Shenoy, if your loan agreement clearly states that a part of loan amount is meant for interiors, you can very much ask SBI to release the amount for the Interiors. No problem in it.
thanks
Ashal
thanks Ashal. Will they release it before procession ?
Hello Ashal,
SLOP is secondary legal opinion charges. SBI takes a second legal opinion once you submit the originals
Thanks,
Nithin
Dear Nitin, thanks for the explanation.
Thanks
Ashal
Hi Ashal,
One query ,I have availed loan of Rs 16 lakh, full EMI of Rs 14000 each month.
The first loan dis imbursement started on 23 th sep .I had parked additional Rs 20100 in my account before first dismbuersement.
Now on 1st November the loan acct statement is as below:
Book Balance -8,92,963.00
Available Balance 6,99,068.00
Limit 15,92,031.00
Uncleared balance 0.00
Drawing Power 15,92,031.00
Currency INR
Rate of Interest (% p.a.) 10.05%
Lien Amount 0.00
Last 10 Transactions
Date (Value Date) Narration Ref. No. Debit
31-Oct-2013 (31-Oct-2013) DEBIT INTEREST 7,557 (DEBIT)
30-Sep-2013 (30-Sep-2013) DEBIT INTEREST 1,946 (DEBIT)
23-Sep-2013 (23-Sep-2013) Dis BUILDER PAY 9,03,560 (DEB)
21-Sep-2013 (21-Sep-2013) Surplus Amount 20,000 (CREDIT)
21-Sep-2013 (21-Sep-2013) Surplus Amount 100.00 (CREDIT)
What i want to ask is why they not cutting full emi of Rs 14000 from my salary account because it is full EMI option,My salary account has not been debited for Rs 14000 for both month SEP and OCT.
They had told me that automatically amount will be debited from your salary account and added to OD account.Till now they have debited nothing from my saving account.
Is it mistake from SBI bank side
Dear Pranav, the debit entries are meant for interest towards the disbursed loan amount of 9.03L Rs. For EMI debit, please contact your loan serving branch.
Thanks
Ashal
Hello,
If I park surplus amount before final disbursement, can I withdraw the same once the final disbursement is done
thanks
veerendra
Dear Veerendra, yes, post final disbursal, you can withdraw your own parked amount. But you w’d have to apply for transaction rights on your OD account to your loan serving branch.
Thanks
Ashal
Hi Ashal,
What are the pros and cons of early closure of a loan in case of a maxgain ?
Thanks,
Aniket
Dear Aniket, in case of early closure of your Max Gain loan, you lose the liquidity of your money. Post loan closure, the money is not there with you and you can not use it for your need if arise. Actually, once your book balance becomes zero, there is no need to close the loan. At this point, your interest outgo is zero and practically, you are running a loan with 0% interest. In case of need, you may withdraw your own amount and if the amount makes book balance negative, interest charging ‘ll start again on it.
Early closure of Max Gain only give you a mental satisfaction that you have repaid your loan.
Thanks
Ashal
Hi,
I have taken maxgain loan recently. Could you please clarify my doubts on that.
Loan amount – 20,00,000 Rate – 10.1 %
First EMI will deduct on 5th Nov 2013
possession will be in March 2015
I have started taken FULL EMI option from first day.
now when my maxgain account created below is my account details.
Book Balance – 0
Available Balance – 20,00,000
Limit – 20,00,000
Drawing Power – 20,00,000
After first disbursement (1,28,285) to builder my account details are as below. Disbursement date – 17th Oct 2013
Book Balance – (-1,28,285)
Available Balance – 18,71,715
Limit – 20,00,000
Drawing Power – 20,00,000
But next day 0n 18th Oct 2013 5000 has been credited to my account and now below are my account details.
Book Balance – (-1,23,285)
Available Balance – 18,76,715
Limit – 20,00,000
Drawing Power – 20,00,000
I have checked that this Rs. 5000 cheque, I have given to RACPC branch as a processing fee.
Then why they have credited this amount to my maxgain account?
They have increased my Available Balance, means I can withdraw 5000 more and need to pay more interest?
Dear Daxesh, relax. that’s wrong entry on account of SBI. it’ll reverse the same.
thanks
Ashal
Thanks Ashal for reply…
Hey Ashal,
Nice article ..
I have a question though …
My available balance is soon going to be more than my drawing power … i.e. I will be having surplus money more than my outstanding loan amount … and I do not wish to close the loan as I will be needing a part of that money soon … may be in another two years … how does this work for me in this case ….
Is there any limit on the amount of surplus money I can park in my maxgain account
Thanks,
Aniket
Dear Aniket, let me put it with an example. Say your Drawing Power is 20L Rs. as of now and you are already having say 21L Rs. there. Well my take, please withdraw the extra 1L Rs. as you ‘ll not earn any interest on this extra amount. So keep only basic Drawing power equal amount. Anything above it, should be transferred to your ordinary SB account.
Thanks
Ashal
Hey Ashal, that was quick .. thank you for helping me understand how maxgain works … in short if I have to get maximum benefit out of this account … I can have my available balance equal to my drawing power … if my available balance goes above that, I will not be getting any benefit out of it … in fact I will loose my interest for the excess amount … am I right?
Dear Aniket, yes. When your Available balance is more than your Drawing Power, you ‘ll not earn any interest on the excess amount. Your understanding is correct.
Thanks
Ashal
Thank you Ashal … That was very helpful
-Aniket
Hi Ansal
Firstly awsum analysis. The article helped me in selecting SBI MG rather than going for any different loan product. Thanks for that.
Now my query
Book Balance -49,48,589.00
Available Balance 1,17,380.00
Limit 50,65,969.00
Uncleared balance 0.00
Drawing Power 50,65,969.00
Rate of Interest (% p.a.) 10.2%
Lien Amount 0.00
transaction details are as below
4-Oct-2013 (04-Oct-2013) BY TRANSFER NEFT*AMOL TRANSFER FROM 50,000.00
30-Sep-2013 (30-Sep-2013) DEBIT INTEREST 41,588.00
15-Sep-2013 (15-Sep-2013) DEPOSIT TRANSFER TRANSFER FROM . AMOL 49,555.00
04-Sep-2013 (04-Sep-2013) BY TRANSF ENEFT*AMOL 1,00,000.00
02-Sep-2013 (02-Sep-2013) BY TRANSFER TRANSFER FROM 500.00
31-Aug-2013 (31-Aug-2013) DEBIT INTEREST 7,056.00
28-Aug-2013 (28-Aug-2013) DR INT CREDIT 1,411.23
28-Aug-2013 (28-Aug-2013) DEBIT INTEREST 1,411.23
27-Aug-2013 (27-Aug-2013) TO TRANSFER
NEFT BUILDER TRANSFER TO BUILDER 51,00,000.00
My loan is of 51 lacs
I have transferred 150500 but my available balance is 1,17,380.00 .
Why is it less than the amount i put in ?
Why is there a Interest charge for 41,588.00 even though I have paid the 49,555.00. will there be an interest charge every month ?
Is there any thing wrong with my A/C
Thanks
Amol
Dear Amol, accidently in the first month itself, SBI has deducted 34031 Rs. towards Principal repayment and that’s the reason your DP is now 5065969. Please contact your loan serving branch if you want to get it rectified. Personally i w’d like it to remain as it is. Due to SBI’s fault, more than normal principal has been adjusted and now your interest outgo ‘ll be lower due to this excess principal adjustment.
thanks
Ashal
Bhai thanks for pointing the DP out.
My concern was around the interest.
30-Sep-2013 (30-Sep-2013) DEBIT INTEREST 41,588.00
will there be a similar charge every month.
1..Why is they charging this even when i am paying my EMI.
2..Also I was expecting my available balance 150500 (the extra money i transferred) but it is 1,17,380.00
Again thanks for taking the time out and replying
Amol
Oh if it helps .
1…The property selected was Ready to move in property .
we got possession immediately after loan disbursement.
2.. the disbursement was a single full complete disbursement.
27-Aug-2013 (27-Aug-2013) TO TRANSFER
NEFT BUILDER TRANSFER TO BUILDER 51,00,000.00
I am just not sure why are they charging both -interest and EMI .
And will it be that same for every month ??.
Interest—–30-Sep-2013 (30-Sep-2013) DEBIT INTEREST 41,588.00
EMI—-15-Sep-2013 (15-Sep-2013) DEPOSIT TRANSFER -TRANSFER FROM . AMOL 49,555.00
2..Also , my total extra deposits 150500 but the available balance is 1,17,380.00 why is there a difference of 33120
Thanks
Amol
Dear Amol, you are paying EMI in the mid of a month and being an Over Draft account, the interest ‘ll be charged only on the last day of the month. So each month, EMI ‘ll be credited into your OD account. Principal part ‘ll be adjusted immediately but the interest ‘ll be adjusted only on last day of the month. The 33K amount is actually adjusted towards that Drawing power reduction in one shot.
Thanks
Ashal
Thanks for your reply and help in explaining the interest deduction… Makes some sense now.
So, 33K has been considered as a part prepayment (in a regular housing loan terms and cannot be withdrawn)
However that has reduced my available balance to 1,17,380.
Being a Maxgain loan , is there any reason for SBI to do this.
Should this not be in the Available amount bracket.
Is there any basis for the value 33K
Is this an error .
Are there any other implications for this.
Should I report this or does it give me any advantage.
Sorry for so many questions. I am just a bit concerned.
Thanks Again
Amol
Dear Amol, believe it or not but this is a common problem reported earlier also by many (I’m also the person who got the benefit of this error). There seems some bug or technical issue within SBI’s software that first month’s calculation remains erractic for many if not all. Please enjoy bthe fruits of SBI’s error. In the form of reduced loan o/s amount.
Thanks
Ashal
Thanks Anshal
Can i claim Tax benefit for Principal Repayment (80C)
against this 33K??
🙂
Amol
Dear Amol, any reduction in your DP is principal repayment and hence it’s available for section 80C benefit.
Thanks
Ashal
Hi Amol,
Thanks for sharing the info in detail.
I have a question @ it.
What will happen if i remove the 2 lacs after say 6 months from maxgain account?
Dear Kunal, if you withdraw your parked 2L Rs. after 6 months, the book balance ‘ll return back from 27.7L Rs. to 29.7L Rs. and you ‘ll be paying interest on 29.7L Rs. amount now.
Thanks
Ashal
Hi,
I have applied for SBI Maxgain loan for 8 laks. 384115rs has been disbursed.
Book Balance -3,84,220.00
Available Balance 4,15,780.00
Limit 8,00,000.00
Uncleared balance 0.00
Drawing Power 8,00,000.00
Currency INR
Rate of Interest (% p.a.) 10.05%
I was told i would be paying interest only for 1.5 years till final disbursement. Pls provide some clarification for it. Also If i pay more than my pri emi every month would it help in any way.
Dear Sandeep, thankas for writing in. Please do note in case of your surplus amount parked before final disbursdal, you can not pull it out in case of any emergency. yes you have the option to park your surplus money to bring down your interest outgo even during pre EMI phase. If your cashflow permits, please opt for full EMI from day one of your loan.
Regarding the interest to be charged from you duering partial disbursement, it ‘ll be charged on the amount disbursed till date on mly basis.
thanks
Ashal
Dear Ashal, I have been going through various posts and replies in this forum and found it is quite good to understand Maxgain. I have taken MG loan of Rs.1380000 on 25/06/2013(disbursed) and I have parked Rs.57,000/- 10/09/2013 in the account. My EMI is 13272/- Could you please brief me what would be the interest for June, July & September, 2013 as I am out of station and could not take netbanking docs from bank. Thanks in advance.
Mohandas
Dear Mohan, thanks for writing in. What is the Rate of Interest in your loan? When did you start your EMI?
Thanks
Ashal
RoI is 9.95% and EMI started from July, 2013 onwards. Also came to know that from October, 2013 RoI would be 10.05%
Dear Mohandas, The interest for you in June 2013 was due for 6 days. Hence Interest to be charged in June 2013 = 1380000*.0995*6/365 = 3762 Rs.
As you did not put any amount in June 2013, this 3762 Rs. ‘ll be added to your basic loan amount and hence for July month, your loan balance ‘ll read 1383762. Rs.
Now for July, Aug and Sept Month, I do need your EMI dates also.
Thanks
Ashal
Thanks. my EMI date is 20th and 1st EMI debited to my account is on 20/07/2013.
Regards,
Mohandas
Dear Mohandas, as providing calculation here is not possible in detail, I’m sending you a personal mail. Please check the same.
Thanks
Ashal
Thanks a lot.
Dear Ashal,
I was trying to fill the spread sheet for calculating benefits of max gain loan. How can we find out the values if the loan has been completely disbursed an year ago.
Dear George, put the disbursement figure and after that for next disbursals put zero.
Thanks
Ashal
Ashal,
Before parking any amount in MG account I had Rs30K under “Available Balance” and I have parked 2.5lac, which makes total amount in MG account under “Available Balance” to be 2.8lac. I have to pay for my interiors which is 2.75lac can I pay through MG account cheque. To be more clear can I take out entire amount which is under “Available Balance” in my MG account.
Thanks a lot,
Prathap
Dear Pratap, do you have transaction rights activated? If yes, you can pay through cheque. if not first ask your loan serving branch for transaction rights activation.
Thanks
Ashal
Dear Ashal
Niceee article,
I am having SBI home loan from sept 2009 of more than 30 lacs, with fixed interest rate for 3 yrs 8, 8.5 and 9 percent. Last year that interest rate shoot up to 13 %, that time I paid 1 time charges and reduced interest to 10.1% as I made enquiry in SBI RACPC to shift to SBI MG, but he refused saying this can be done only at the initial approval of the loan, now it is not possible, but after reading the above article can see its transferable. Will again make enquiry for the same in SBI.
Can you advice whether it is good to stick with SBI under normal House loan plan or should go to any other bank with OD facility if SBI is refusing to shift ???
Thanks
Saket
Dear Saket, the primary benefit of SBI Max Gain lies in the liquidity available on our own money. If you want to keep this liquidity open, try for SBI Max Gain conversion. Else let it remain as it is. IDBI also offers similar product under the name Interest Saver but the Rate of Interest is 0.5% higher than regular home loan product.
Thanks
Ashal
Thanx for your response, yes will be having some surplus amount but still want liquidity so will try for SBI Max gain or will check with IDBI.
but can you pls confirm if normal Home loan can be converted to Max gain ??? and any idea how to do it ??
saket
Dear Saket, please contact your RACPC & specially the AGM in charge of Loans.
Thanks
Ashal
My loan serving branch manager has refused to provide amortization schedule – says he cannot provide that..Is this true?
Dear Pankaj, loan amortization schedule should be provided by your Bank manager. In case he is not co-operating, You can demand the same from customer care. Alternatively, you can prepare your own Amortization schedule on exl. loan amort. template.
Thanks
Ashal
Thank you Ashal. I see after using the template that the EMI being charged by the bank is higher than the EMI showed in the template. on the other hand when i use the EMI that bank is charging – in the template the tenure is lower then what bank is indicating.
Also from the statement i cannot really see if I have received any benefits of SBI Max Gain scheme – the reason i say this is because the interest has never gone down, inspite of keeping about 10L in the saving account. I am confused, can you please help identify an approach to handle or clarify this.
Looking forward to hear from you.
Regards
Pankaj
Dear Pankaj, can you share your account statement in exl. format with me? I want to look into it before making any comment.
Thanks
Ashal
Sure, where should I sent that to Ashal?
Dear Pankaj, please check your gmail inbox for my reply mail. You can mail your account statement directly to my mail ID.
Thanks
Ashal
If I have taken a loan of 30lac @ 10% interest and I have a MG account and if I park 2 lac in my OD account in the mid of the month then how is interest calculated.
You will be charged 10% interest on 30 lakhs for the first 15 days and then you will be charged 10% interest on 28 lakhs for the remaining days of the month.
Dear Pratap, let me try it. Say Your book balance was 3000000 Rs. on 1st of the month. EMI date is 10th & you parked 200000 Rs. deposited on 15th. Loan is for 20Y term & ROI is 9.95%.
Below ‘ll be your Interest calculation.
Interest from 1st to 9 = 3000000*0.0995*9/365 = 7360.27
Post EMI credit on 10th the book balance ‘ll change as principal part of your EMI (3976 Rs.) ‘ll be adjusted towards basic loan, hence new book balance = 3000000-3976-24875 = 2971149
Hence Interest on new book balance from 10th to 14th = 2971149*.0995*5/365 = 4049.71
After you deposit 2L Rs., new book balance = 2971149 – 200000 = 2771149
Interest on this new book balance from 15th to 30th (for Sept, Nov & other 30days months, in case of Jan, Mar & other 31 days it’ll be 31 day & Feb 28 or 29 as per days in that year) = 2771149*.0995*16/365 = 12086.76
Now total interest to be paid on 30th = 7360.27+4049.71+12086.76 = 23496.74
Please do note, in your original EMI, the actual interest paid by you = 28851-3976 = 24875
Hence saving to you = 24875 – 23496.74 = 1378.26
Thanks
Ashal
You have calculated new book balance as 300000 -3976-24875=2971149.. I understand that 3976 is the principal component. What is 24875? Is it emi paid on 10 th minus the principal ? that means 24875+3976 is the emi? then why don’t you deduct the emi in full from 300000, instead of deducting principal component and interest component separately! Am I missing something to understand?
Dear Chandra, 24875+3946 = 28851 which is EMI. Actually on 10th the principal part of your EMI (3976 Rs.) is adjusted from the basic loan amount which is called Drawing Power in max gain. So post this adjustment of principal on EMI date, the new DP ‘ll be 3000000 – 3976 = 2996024 Rs.
Now the interest part of EMI which is 24875 ‘ll remain as surplus in max gain account as interest is to be adjusted on last day of the month. So for calculation purpose, the Available balance ‘ll be new DP – interest part of EMI = 2996024 – 24875. Hope it clarifies your doubt.
Thanks
Ashal
Dear Ashalanshu,
Your article helped me a lot to understand Maxgain advantages as well as OD management. Needless to say the additional credit goes to Mr.Srikant for his calculator. Welldone Srikant. I am yet to experiment it.
Now I need to clarify one fact. My Loan amount is 1500000. If I park full 1500000 in my OD account, The EMI interest part will be accumulated in my available balance. In that case whether I am eligible for claiming my emi interest amount for income tax filing. Because I am getting back immediately into my available balance (Assume I am not at all drawing that accumulated amount for any purpose).
Kindly answer my question.
Advance thanks.
Senthil.
Dear Senthil, thanks for writing in. As there is no interest deduction, there ‘ll not be any tax benefit either. As simple as that. 🙂
thanks
Ashal
Hi Ashal,
Thanks for the informative article. I have a couple of quick questions.
FIRST SCENARIO
Suppose loan amount is 30L. and I have managed to put all 30 L in Maxgain account after final disbursement.
1. So total interest for next next becomes zero.
2. How the EMI will look like for first month ?
3. What happens to rest of loan tenure given that loan account has no interest to apply and all the principal is already in account.
SECOND SCENARIO
1. I have completed moratorium But final disbursement is not done yet.
2. 20L disbursed till date.
3. I have made partial payment of 15L and loan actual outstanding loan is 5L.I understand at this point it is not OD since final disbursement is not done.
4. Does that means – Surplus is used to deduct from principal AND after final disbursement when it becomes OD I have a smaller princpal to service .
OR
Surplus parked during moratorium is not available to overdraft unless final disbursement and after final disbursement it becomes available.
regards,
Pratyush
Dear Pratyush, please try to understand that in case 1, there ‘ll be no impact on your loan term or EMI. the same ‘ll continue as usual. the interest part of your EMI ‘ll be available to you to immediate withdrawal.
For case 2, interest ‘ll be charged only on the 5L Rs. book balance & remaining part of your EMI’s interest ‘ll be added up into surplus balance for next month.
Thanks
Ashal
Thanks Ashal,much appreciated!
I guess then it all boils down to –
If I have parked all 30L for a 30L loan as surplus resulting in zero interest –
and given that the emi and loan tenure remain same –
will the rest of Emi be auto deducted for surplus ?
Thanks,
Pratyush
Correction for typo : will the rest of emi be auto deducted *from surplus?
Or what is the process to enable it ?
Dear Pratyush, EMI is first debited from a normal SB account & then it’s credited into Max Gain account. Even if you have parked full 30L Rs. the EMI debit ‘ll continue from SB account & credit into MG account. The principal part of your EMI ‘ll be adjusted towards the loan balance which is drawing power in Max Gain & the interest part ‘ll be added up to your already parked surplus which is 30L Rs. So your available surplus now ‘ll be 30+Interest part of EMI.
Thanks
Dear Ashal,
Thank you for your information on SBI Maxgain on Jagoinvesors and on this site.
I also have Maxgain A/C, linked with my SB A/C on net banking. It is showing one Maxgain surakha a/c. When i deposited amount to my OD account some part is getting transferred to suraksha a/c also. This a/c also shows the drawing power, ROI etc. Can you please help me to understand this a/c also?
Thanks
AMOL L
Dear Amol, that Suraksha account is your insurance prem. account opened for the Rin Raksha policy issued to cover your loan. In case you want to stop this separate deduction, please ask SBI to deduct the amount from your surplus balance towards the DP of Suraksha account.
Thanks
Ashal
Dear Ashal, I had included the Rin Raksha premium in my home loan amount. It will be in instalments. Suraksha a/c also showing drawing power, what is it?
Dear Amol, the prem. amount of your Rin Raksha policy is your DP in this suraksha account.
Thanks
Ashal
There is new version of Max Gain Calculator via the same link –
https://docs.google.com/file/d/0B-mdbyqMT5YHNXl4M3JjbFdyZEk/edit?usp=sharing
This version facilitates overriding interest rate, EMI and EMI pay day whenever it changes. Internally it is now using Daily Reducing Balance method for interest calculation, which is followed by SBI and most public sector banks.
Dear Shreekant, thanks for the update. Keep up the good work.
Thanks
Ashal
Thanks a lot for this tool. Some enhancement points will be a) Include provision for Partial Disbursement. This happens construction linked payments
Dear Shreekant, I can sing only one song from Movie Aahiqui 2, here.
Sun raha hai na tu…………………….. 🙂
Thanks
Ashal
Ashal,
Very true ! ::))
Thanks,
Shree
Kariyan,
Thanks for the comment. The main purpose of this tool is to assess and forecast Max Gain advantage by parking additional amount. Generally you will start this parking after registration of the property and complete disbursement of the loan amount (before which any parked amount will not be liquid for withdrawal). So when you start using this tool, enter the Principal loan amount equal to the loan outstanding after final disbursement of the loan, which can be more or less than the sanctioned loan amount. Before final disbursement you can still use this tool for forecast and after final disbursement you can use it as daily tracker as well as for forecast. Hope this helps.
Having said that, efforts will be still on to incorporate logical requirements.
Regards,
Shreekant
https://sites.google.com/site/sojusebastain/home
Kariyan,
Thanks for the input. I opened this site, but could not enter any values; it opens read only to me. Were you able to use it?
Regards,
Shreekant
https://docs.google.com/spreadsheet/ccc?key=0AiBKBLaj8cKfdENFWmwwOUhwUXcxc2hhaUhnRzdEeHc&hl=en_US#gid=3
Follow this URL
Hi Shreekant,
Thanks for the calculator. Can you please let me know how the interest has been calculated. I see the formula bit strange than the normal one.
my query send to ur mail id pl give me feedback
Dear Nirmal, answered already.
Thanks
Ashal
ashal,
my max gain loan was 2009 dec ,and my interest rate 8% on first year,8.5% in second ,and 9% third on fix and i can not deposite any repayment but now days rate increas 11% so i want to know that i loss my money due to not deposte surplus amount,my emi 11000rs and loan 11 lakh pl give me answer for that
Dear Nirmal, can you explain in detail? I’m unale to understand your query properly. if you do not mind, you may mail me to my personal e-mail ID also.
Thanks
Ashal
first of all thank u very much for answer,also exellent article,i have another confution i linked atm saving and mg its risky? as per ur answer,i need link atm both a/c because of my mg a/c not given by sbi due to another sbi saving atm .if i repayment in mg a/c i will show my balance of my mg a/c in my linked atm or not,
Dear Nirmal, after linking of your Max Gain account with your existing ATM card, you can see your available balance through it. At the time of checking the balance you w’d have to select account type as current.
Thanks
Ashal
Excellent article!!!
I have an additional Query – Is it possible to use the surplus fund in SBI Max Gain account as margin for applying IPO via ASBA facility?
Regards,
Sachin
Dear Sachin, thanks for writing in. Yes you can use surplus amount of Max Gain for IPO-ASBA application.
Thanks
Ashal
i have home loan a/c max gain sbi and also saving a/c in another sbi branch,i got checkbook for max gain a/c but atm card not got because of another saving a/c so what i will do for got atm card
1.i want to link my saving a/c atm with mg a/c is write thing or not please give me answer also whats the process for that and how to use both a/c with one atm and i want to know that i will know my max gain a/c balance or transection by that atm pl give me reply
Dear Nirmal, please contact your loan serving branch to link your Max Gain account with your existing ATM card if you like to. Personally I’m not comfortable with MG account linked with my ATM card. The reason is simple. In case of ATM card, the impact on you ‘ll be huge if somehow your ATM card is compromised. In your SB account, you may be having a balance of few thousands Rs. only. whereas in your MG account, it may run into several Lakhs. So think over it.
Thanks
Ashal
hi
we had recently got converted our home loan account into a max gain account. as earlier we had prepaid an amount of 3 lakhs, our max gain a/c is showing a withdrawable balance of 321xxx. i have got internet banking with full transaction rights. how can i withdraw this amount from my of a/c? Pl help. even branch people does not know much about this.
Dear Nilkhil, as the transaction rights are active, use it to transfer money from Max Gain to any other account just like you transfer from SB account to other accounts.
Thanks
Ashal
Ashal,
Thanks a lot for detailed article. I do have multiple questions.
1) I have SBI max gain account operated from senapati bapat road. But All processing was done at RACPC, swargate. Actually I live in hadapsar. So can I transfer the home loan account to hadapsar?
2) Recently I have paid last disbursement of Rs.1.5L to builder from my own savings. What is the process to inform this to bank, because henceforth i will not need loan as full payment has happened. which branch i have to contact for that?
3) I am able to put money in max gain account, but not able to withdraw it. why it is so? what is process (which branch RACPC, or S.B road)
I appreciate your help in this regard
Thanks
Amol
Dear Amol, thanks for writing in. Here are the answers for your query.
1. Yes you can tranfer to your desired branch in Hadapsar. For that you need to apply for same in senapati bapat road branch.
2. Avail a completion & possession certificate from your builder & deposit the same to your loan branch & ask there to consider current stage for disbursal fulfilled. The branch staff ‘ll do necessary back end work to make it effective for you.
3. That’s beacuase your disbursal is pending as per bank record. Do the point 2 above & after that demand Transaction rights on your Max Gain account. You ‘ll be able to withdraw your money. As of now contact SB road branch for it after completing point 2.
Thanks
Ashal
Dear Anshal,
1. Yes you can tranfer to your desired branch in Hadapsar. For that you need to apply for same in senapati bapat road branch.
— I have same scenario. SBI has opened the loan account in Pashan Branch while I got property in Kharadi. Loan processing done at Wakdewadi branch. When I request for them to transfer my loan account to Kharadi branch they refused and said it is not possible. Kindly advice.
Dear Kashif, thanks for writing in. I’m sharing my personal experience. I had my loan account in branch A as my builder had a tie up with that branch being close to his office. My original SB account was in branch B. After initial few months I applied for loan account change & later on this was done with few follow ups with Branch A.
what more I can say now for your situation?
Thanks
Ashal
Thanks for your prompt reply Ashal, really appreciate it. Atleast now I got confidence that it can be done and will persist with SBI staff for my request of transferring account to another branch. Thanks again.
Dear Kashif, please read my new reply to you in the forum itself.
Thanks
Ashal Jauhari
Financial Planner
http://www.asanideasforwealth.wordpress.com
Dear Kashif, relax & apply with a confident mind. Actually there is a hidden reason for it that SBI staff is not co-operating. The loan ‘ll be counted as asset for the new branch after your transfer whereas the work was done by old branch. So the incentives or commissions linked to loan ‘ll be availed by new branch without any work whereas old branch ‘ll lose it’s fruits. 🙂
This is the reason they are refusing you flatly.
Thanks
Ashal
Ashal,
My Max Gain Loan Calculator is available at
https://docs.google.com/file/d/0B-mdbyqMT5YHbl9HQ0xCNDUwckE/edit
You can download and check. I have published it to my apartment community.
Regards,
Shreekant
Great work Shreekant ! Couple of observations which I have after glancing through your spreadsheet :
1. There should be a way to override the EMI value. My EMI was originally 32xxx but during disbursement, myself and SBI mutually decided to have the EMI rounded off to 33000 Rs.
2. Your sheet seems to assume that the interest calculations happen on the basis of monthly balance whereas it actually gets calculated on the basis of daily reducing balance. For eg: If I deposit 1000 Rs for first 15 days and I deposit another 1000 Rs for the next 15 days, the total interest amount for that month which I would earn would be 1000 * 15/365 * ROI + 2000 * 15/365 * ROI. Currently your spreadsheet doesn’t let the user specify the dates on which the OD deposit/withdrawal was made which is important to calculate the interest amount correctly.
Thanks Gaurav. You are right on your observations. I am aware of these limitations, and will continue to work on it. I will try publishing new version soon.
…..Gaurav, and for that matter, interest rate also changes over the period. So at any point in time there should be a way to change the interest rate for the remaining tenure.
Dear Gaurav, there is nothing wrong in demanding things the way you want to. Please do note, in case of Max Gain, you are right that interest is calculated on daily reducing balance but my dear friend, each Individual’s Max Gain account may have different entries spread all over the month & how can a fixed calculator be prepared for that daily thing? The reason is – you w’d have to punch in your personal data for each transaction value on every day in a month. W’d you like to take that much pain?
Instead of demanding more & more complex calculators, the simple thing can be done here. Prepare a simple loan amortization on your PC from the loan amortization template of excel. Keep this one as your standard interest applicable for you if you don not park any thing extra in your max gain. Now compare the actual interest charged by SBI from you. The difference in standard interest to actual interest is your saving. That’s it. 🙂
Thanks
Ashal
Ashal,
Thanks for your understanding. Having said that, I found Gaurav’s comments and suggestions helpful for my own loan repayment calculation and so I am updating the tool for my own purpose, which then I will share with all. So the tools keep evolving. So I am updating the tool to facilitate (a) entering date wise OD deposits and withdrawals (b) calculating interest on OD deposit and withdrawal with daily reducing balance (c) overriding interest rate and/or EMI whenever it changes from any month.
My expectation of this tool is to serve the purpose of daily working sheet of the loan for any Max Gain home loan customer. Hope, it would work
Thanks,
Shreekant
Dear Shreekant, thanks for the update. I’m neither against Gaurav nor stopping you from creating one more tool. What I’m saying is beyond a point this hard work is not going to see any meaningful value.
I may test for different figures in your tool but at the end of the day, each month’s benefit ‘ll be there with me only after it actually happens. 🙂
Thanks
Ashal
Ashal,
Thanks for the reply. Here is the next version of Max Gain Loan Calculator that facilitates overriding interest rate and EMI if and when they change and entering day wise OD deposit and withdrawal in a month.
Link to the tool – https://docs.google.com/file/d/0B-mdbyqMT5YHNXl4M3JjbFdyZEk/edit?usp=sharing
Regaeds,
Shreekant
Dear Shreekant, First of all Please accept my congratulations for preparing such an exhaustive Max Gain calculator. I’m really thankful to you from the core of my heart. 🙂
Thanks
Ashal
Shreekant, Could you please drop me a mail at smartgaurav@gmail.com so that I could reply to your email directly. If I put my seemingly endless demands over here, I risk being banned by Ashal 😉
Thanks for your tool
Dear Gaurav, I have no intention to Ban you. You are missing the point. Can you define what ‘ll be your OD balance after 8-12-16 months here after? The basic Idea is clear to you. If you park money, you save on interest outgo, if you withdraw money, you pay higher interest. Believe me, you ‘ll play with the hard work of dear Shreekant for few days & after that it ‘ll be business as usual for you or anybody.
The actual saving of Max Gain ‘ll accrue only over the time & as per your actual parked amount. 🙂
Thanks
Ashal
Dear Sir,
I need some help. I have taken home loan of Rs.36,00,000/-. Property is under construction. Total drawn amount so far is Rs.18,00,000/- and available balance is Rs.18,00,000/- Which means I can draw Rs.18 L more. Property is still not registered. I have started pre EMI. If I go with full EMI now I will be paying more principle which will help to reduce my outflow in the form of interest. If I pay more principle , whatever I paid can be taken drawn later if I need money in the later stage before registration ? For eg let us say over 6 months if I am paying Rs.1,00,000/- principal will it reduce outstanding amount to Rs.17,00,000/- and increase available balance to Rs.19,00,000/- which can be drawn ?
Dear Narayana, thanks for writing in. please do note, you can park directly or pay full EMI from day one but whatever the surplus amount ‘ll be there in your Max Gain account, you can withdraw it only after final disbursal ofyour loan amount.
Thanks
Ashal
Hi
For my home loan of 15L, 10 L disbursed on 8th Jul. EMI Starts on 10th Aug. As per my calculation approx 8200/- is interest for the 10L, before EMI starts.
I have my loan a/c and my savings a/c in SBI.
How this amount will be adjusted, How do I pay?
Do I need to transfer this 8200/- to the loan a/c before EMI starts?
Please clarify.
Dear Kariyan, SBI ‘ll adjust this interest liability from the available 5L Rs. undisbursed loan amount. So to save the same, please transfer 8200 Rs. now from your SB acct. to Max Gain acct. On the last day of the month i.e. 31st July, this 8200 Rs. paid by you in advance, ‘ll be adjusted towards the interest liability.
Thanks
Ashal
Thanks..!
Ashal, Is the interest (EMI interest – Actual interest) being deposited by the bank in MG account considered as income and is that taxable?
Dear Shreekant, the plain answer to your query is NO. The saved interest is not your income & hence question of taxation does not arise.
Thanks
Ashal
Dear Ashal,
I have an existing SBI MG HL for the amount of 30lacs for 20years. Final disbursement was done in November 2012. I have been paying full emi’s since march 2012. My current interest rate is 10.25%. SBI is giving me an option to reduce the interest rate to 9.95% and the base rate to 9.75% by paying a one time conversion charge of rs.16800. Please let me know if its worth converting.
Rgds
Anish
Dear Anish, thanks for writing in. Paying the conversion fee & switching to a lower rate is a good Idea. Please opt for it.
Thanks
Ashal
Once we pay the one time conversion fee then how will it further increased or decreased? I just completed 3 years of my maxgain home loan and now my interest rate jumped to 11.75% from 9%. If I pay 1% conversion fee then will my interest rate come down to 9.95%. And after that it will be linked to the base rate. is that correct?
Dear Bhavesh, after paying the conversion fee, your new ROI ‘ll 9.95% linked with Base Rate (9.7%) with a spread of 0.25%. In future, whenever SBI ‘ll change it’s Base Rate, your loan’s ROI ‘ll change accordingly & at that time you w’d need not to pay anything extra from your pocket.
Thanks
Ashal
Hi Anshal,
I hit upon your article on Maxgain in the net as I was scouting for more information on this. Need to thank you for the detailed article and for clarifying so many questions. I have a few queries though, which can be helpful if you can clarify it.
1) Understand from your article that if I have a say 30L loan for 20 years and if I have say 30L surplus with me, its good to park that amount in the MG account. But I see you advicing people not to close the loan, instead keep it open for the entire tenure. Can you please explain me the benefits of keeping the loan account active?
2) My current ROI for loan is 10.45% for a loan amount of 33.59L. Now since I can avail a lowered ROI @10.1% by paying some difference fees, I would like to understand whether it really makes sense to pay and bring down the Interest, considering the time it will take to breakeven the processing fee. Can you please share your views?
Regards,
Ramesh
Dear Ramesh, thanks for writing in. Please do tell me, once your available balance is matched with your drawing power, are you paying any interest here onwards?
Thanks
Ashal
Hi Ashal ,
Appreciate the article and your suggestions.
I was reading all your post , you are advising that its prudent not to close your Max gain account even after pre paying the complete outstanding amount ..Now the extra money which is deducting for EMI would be my surplus however it will not earn any interest in that account ..same amount if i park at some other bank will get interest …so why we do not close the account ?
Please help me in understanding this as i am planning to close my Max gain account.
Regards,
Anurag
Dear Anurag, the extra money in OD account is coming from the interest part of your EMI. It’s available to you withdraw on the same day as the EMI get credited. So where is the need to close the loan as you can use this saved interest amount? In case you opt to close, all the available surplus amount at your disposal ‘ll be adjusted towards loan repayment & later on you can not use your own money in case of any need. Once your available balance is equal to your drawing power or should I say book balance is zero, the interest outgo becomes zero. Now here onwards, your loan is running at zero percent. Now do tell me, is it prudent to close your loan of zero percent interest rate?
Thanks
Ashal
Ashal is right. If your loan is 30L with EMI 28000/month for 20 yrs and if you park surplus 30L into your MG account on day 1 and never withdraw for 20 yrs, then for the entire tenure your book balance will be zero. So you will be charged zero % interest for the entire tenure. But your EMI and tenure will not reduce. For 20 yrs you will keep paying EMI of 28000 and SBI will keep depositing interest part of EMI into your MG account. So in effect, you are paying no interest for the entire tenure. The advantage is that this is liquid money, which you can withdraw anytime. I would like to verify one point with Ashal, which is about income tax. Is this interest component taxable, which is being deposited by the bank in MG account?. If it is not taxable then it is double advantage.
Dear Shreekant, In case of normal loan, the EMI is credited towards your loan account, the principal as well as interest part is taken away by financial institution. In case of SBI Max Gain, the interest part is being transferred from your SB account to OD account under your regular EMI & as the book balance is zero, no actual deduction happens. So it was your own money (the interest) moved from SB to OD account. Where is the income here? As there is no Income, no Tax at all. As simple as that.
Thanks
Ashal
Ashal,
You mentioned in one of the points that, neither EMI nor tenure reduces in case of Max Gain, which makes sense since in case of parking in Max Gain actual repayment against the loan is not done. And the interest saved is transferred to OD account and added to its balance. So in your example, where for a loan of Rs.30,00,000 Rs.2,00,000 was parked in OD account, so the interest was calculated on Rs.28,00,000 and the interest saved was Rs.1,667. This amount was transferred to the OD account and the next month balance in OD account became Rs.2,01,667 and no additional amount was parked. So, now in the next month, as I understand the will be calculated on (Ending Balance – 2,01,667). Is this correct?
I am developing a tool on Max Gain Loan Calculator. And I made a small mistake that instead of transferring Rs.1,667 to the OD balance I considered that as addition to principal component, which caused loan to end early.
Your response is greatly appreciated and will help me correcting the tool. Once corrected, I will share the tool in this forum.
Regards,
Shreekant
Dear Shreekant, yes, your understanding is correct, the next month interest ‘ll be charged on Ending balance – surplus or better called book balance in Max Gain account itself. 🙂
Please feel free to ask for any help regarding this Max Gain calculator.
thanks
Ashal
Hi Ashal, I have a home loan of 30 Lakhs. My 1st EMI was deducted on 5th July. But drawing power still shows 30 Lakhs. Why was the principal amount not deducted from drawing power?
Book Balance -29,19,861.50
Available Balance 80,138.50
Limit 30,00,000.00
Uncleared balance 0.00
Drawing Power 30,00,000.00
Currency INR
Rate of Interest (% p.a.) 9.95%
Lien Amount 0.00
Dear Misha, thanks for writing in. Do you get full disbursal or still final disbursal is to be done? what about Moratorium period if any? How there is a surplus of 80K Rs. as available balance. Due to the interest part of your EMI, the available balance should not be more than 25-27K Rs. for a 20Y loan but it’s 80K, how?
Please clarify.
Thanks
Ashal
Hi Ashal, thanks for your reply. I have transferred 80K to this account for saving my interest. This is a home loan transfer from ICICI bank to SBI. I have received cheque for 30 Lakhs from SBI and closed ICICI bank loan. So, there is no doubt on full disbursal. What is Moratorium period. FYI, my property is a ready possession. I was wondering if the Drawing power will be reduced at end of month July with debit interest. If this is the case, I can wait to check if this happens.
Dear Misha, based upon the inputs from you in your reply, SBI has erred in not reducing your Drawing Power. Please contact your loan serving branch to rectify the mistake.
Thanks
Ashal
Hello Ashal,
I have a home loan from SBI of 25 Lac and holding MaxGain account.I have also taken personal insurance along with this from SBI General and had taken 5 years insurance amount which is 58 K as loan only from SBI. Now I can see two accounts when I login to my SBI internet acocunt.One is OD/MaxGain and another is Loan Account which is MaxGain Suraksha. As far as MaxGain account is concerned, I don’t have any questions however I am confused about MaxGain Suraksha account. When I see the statement for MaxGain Suraksha account, I can only see Debit Interest every month end and there’s no credit at all. This means, my entire monthly EMI goes towards home loan.
My question in this situation is, how can I pay principle of MagGain Suraksha account? Shouldn’t it go every month as a part of EMI?
Am I missing anything?
Please let me know if I am not clear to explain my query.
Thanks and look forward to your response.
Dear Niraj, thanks for writing in. To save on interest outgo on the insurance prem., please park surplus amount equal to your as on date book balance in that Surksha Account.
Thanks
Ashal
Hello Ashal,
Thank you so much for your prompt response!
Here’s what I see in my MaxGain Suraksha account.
Loan Account Details
Account Number
Name
Description MAXGAIN SURAKSHA
Limit 58,000.00
Drawing Power 8.198.00
Outstanding Amount 12,301.00
Rate of Interest 9.95
Currency INR
C.Y.YTD Interest 300.0
P.Y.YTD Interest 531.0
Just to maintain confidentiality, I have not mentioned account number and name.
Please give your thoughts if you have any idea about this.
Thanks again!!
Dear Niraj, 8K+ amount indicates that some prem. is still to be paid. Please park the difference amount i.e. 12K-8K to save on interest outgo.
Thanks
Ashal Jauhari
Financial Planner
http://www.asanideasforwealth.wordpress.com
Hello Ashal,
Thanks for your response.
Do you mean I should park the difference amount ie 4K to my MaxGain Suraksha account? This account doesn’t have a facility of withdrawal so parking any amount this account will not be taken back when needed.
Do you think I should visit branch to better understand this?
Thanks so much!
Dear Niraj, Once the full prem. is debited, the drawing power ‘ll become zero here. As far as query for Interest only getting added up & not adjusted from your basic EMI, you need to talk to your branch manager before parking this 4K amount.
Thanks
Ashal Jauhari
Financial Planner
http://www.asanideasforwealth.wordpress.com
Dear Niraj,
I have the exact same issue with my MaxGain Suraksha Account. I can only see Debit interest and there’s no credits
Have you got a satisfactory resolution to this issue. Please guide me if this is an issue and how it can be fixed
Thanks
Ajit
Dear Ajit, your loan is fully disbursed or not?
Thanks
Ashal
I believe my loan is fully disbursed. Its been more than 2 years now
However the SBI Life Insurance ( total of Rs 1.65L ) is broken into a 5 yearly premiums( ~Rs 33,000 ) and so far I see 3 debits for the insurance premium. There are two more premiums. Does it mean that my loan is fully disbursed only after these two premiums?
Dear Ajit, how much loan amount was sanctioned originally and what’s the Drawing Power in your Max Gain account as on date?
Thanks
Ashal
Dear Anshal,
The sanctioned amount was Rs 65L( MaxGain)+ 1.65L ( MaxGain Suraksha ). The drawing power in my MaxGain is 63,03,228.00. I am not sure how they have arrived at this figure since I have received loan ( and I can see the debits in the maxgain statement ) for amounts 63,49,000.00 + 6,665.00 + 6,665.00 + 1,08,200.00 + 31,551 = Rs 65,02, 081. The last part 31,551 was paid for SBI Gen Insurance.
Since the total amount disbursed is more than 65L , i am assuming my loan was fully disbursed. I am still confused about the Drawing Power and not sure how they arrived at that figure. Do you think that is the cause of my issues?
Thanks & Regards
Ajit
Dear Ajit, how much amount you were supposed to pay to builder in total (including loan amount of 65L Rs.) and how much as on date you have paid to your builder? I’m trying to understand the whole situation, hence asking so many questions.
Thanks
Ashal
Dear Ashal,
I was supposed to pay the builder about Rs 84L. I have paid the full amount ( includes 63,49,000 from SBI ) to builder. Apart from this SBI also paid for registration ( 6,665.00 + 6,665.00 + 1,08,200.00 ).
Thanks
Ajit
Dear Ajit, your basic loan of 65L Rs. is fully disbursed and the 1.65L Rs. Suraksha account is still having 2 more prem. to pay. As on date every month SBI is debiting only interest from suraksha account. Due to continuous debit of interest, there ‘ll not be enough money to pay 5th Prem. So in your own interest please park additional amount into it.
You are paying interest on interest in this suraksha account. So please park additional amount to make it’s book balance zero.
Your basic loan is fully disbursed and the impact of EMIs is there already in the form of reduced Drawing Power.
Thanks
Ashal
Hi Ashal,
Thanks for the suggested solution. As per your solution, I can avoid paying interest on interest by parking funds in the MaxGain Suraksha Account.
However, I have couple of concerns
1. Will I be able to draw these funds back anytime ? From what I read in other posts I will not be able to
2. Is this how it is supposed to work? Shouldn’t SBI use my EMI to add monthly credit into the MaxGain Suraksha Account? The EMI was calculated for the whole amount ( base loan + insurance i.e, Rs 65L + 1.65L ). Isn’t there a mistake or a bug somewhere? Can I get this corrected instead of the workaround solution?
Thanks & Regards
Ajit
Dear Ajit, believe it or not but due to some internal software problem, SBI ‘ll keep the 2 accounts live till final prem. is withdrawn. So you are free to discuss with SBI officials but from my experience of Max Gain for people like you, I w’d say opt for parking money option.
You should also look at this rin raksha policy differently. Why do you want to pay interest on your prem. amount to SBI to a make it a costly policy for yourself?
Thanks
Ashal
Hello,
I am a NRI and had recently purchased a property in India and would be needing loan over it, since the house is in CLP mode and I will get it only in 2015 I will get around 75 Lakh approved from SBI but might not need all of it, but in that case will it affect my current account withdrawal in max gain scheme
Dear Babar, thanks for writing in. Are you asking for parking your own amount & withdrawing the same before Possession is there with you? No, You can not withdraw your own money before possession.
Thanks
Ashal
Thanks for your reply
But in case I don’t need the full approved loan from bank and I use only partial and I get possession of property.then also I cannot take advantage of max gain withdrawl rights from OD account
Dear Babar, after the start of loan disbursal, if your requirement comes down to 30-40-60% of original loan amount, you w’d have to inform your loan serving branch in written that you do not wish to avail more loan & kindly adjust the disbursed part as final loan amount. The bank ‘ll do needful.
Thanks
Ashal
Hi,
I have availed a home loan from SBI under maix gaiin for 28.96L. The first amount disbursed was 7.82L in Jun’13 . The flat is going to be completed by Oct’13 but our EMI will start from Aug’13. only by Oct’13 we will ask for a full disbursement. Since its a partially disbursed account, what if I park some surplus amount into this account to reduce by interest. Will I get the full benefits as a regular max gain account.
Dear Navnit, thanks for writing in. As your loan is in partial disbursal state, the benefit of interest saving ‘ll be there to you against your parked surplus amount. The only problem to you, in case you need to withdraw your surplus amount due to any emergency or something, you can not do so before final disbursal. So keep this thing in mind & park only that much surplus amount which you ‘ll not require even in extreme emergencies.
Thanks
Ashal
HI ASHAL
I have a query
My loan was sanctioned on 12th feb 2013
My emi date is 15th of every month
Debit Interest is on last day of every month
My question is that to get the maximum benefit on the outgoing interest, on what date should the emi be debited from my SBI SB account and on what date should it be credited on SBI MG A/C?
Should I pay my EMI just before the interest is debited or just after the emi is debited ? In which scenario will I get maximum benefit?
Dear Ajay, this so called EMI date benefit ‘ll be limited to only first month, after that the EMI ‘ll be regular affair & it ‘ll not impact. Still if you want to get more benefits, please opt for an EMI on 1st day of the month so that the interest part of the EMI ‘ll also be available for full month as surplus & ‘ll benefit for lower interest outgo.
Thanks
Ashal
Hey Ashal,
Really nice, very informative article. I have taken the Max gain account for more than a year but not known how to use it to the extent. I have already disbursed the entire amount from the bank. I have some queries: From the above article I got the info that available balance is the suplus amount which we put into our max gain account. Before reading this article my available balance was zero. For testing purpose, I transfered 5000 rs apart from regular EMI to my OD account. However, after transfered the amount system shows only 1474 as available balance. I think it should be 5000. Would you please guide me resolve this query meanwhile I will also check with my home branch for the resolution. Do reply.
Dear Hari, thanks for writing in. Can you send me the Account statement of your Max Gain for last 1Y or from the start date? I think there was some amount outstanding in your loan & same was adjusted from your available balance.
Thanks
Ashal
Thanks for the response. Would you please share your mail ID to transfer the Account statement.
very informative article. thanks.
Dear Satyveer, thanks a lot.
Thanks
Ashal
Hello Ashal,
I have few queries.
1. if my book balance reaches zero by parking surplus amount OD account. Can i stop my ECS or EMI deduction from other SBI SB account by telling SBI that i will manually pay EMI as when book balance will not be zero and principle part will be accordingly adjusted from my available balance.
2. If above thing is approved and I want apply for new home loan then can SBI consider me free of any existing loan as no EMI is deducted from SB account?
Reason behind my question is –
– Currently my book balance 54723.
– Previously, my interest rate was 9% fixed for three years (before 23rd June 2013)
– Since three years completed on 23rd jun 2013, my interest rates are changed to 11.95 (including discount of 0.1 % of salary account in SBI)
– To migrate to current interest, i need to pay fee of almost 1.25% which will cost me around 13K. But I don’t have to do that because my book balance is very low so i will not get much affected by the change of interest rates.
Now, I also want to purchase new home and i want take new home loan. And I want to avail maximum loan from SBI and with new home loans interest are also cheaper.
So should i go ahead a close existing Max gain account and Take new one fresh.
Problem in doing this
– I am loosing some liquidity.
– I am also loosing the property insurance and SBI life insurance that i took at the time of taking Loan.
So i am ready to loose liquidity but can i continue my SBI Life insurance and property insurance atleast?
Thanks in advance for your answer.
Best regards,
Prakash Dumbre.
Dear Prakash, thanks for writing in. the plain answer to both the queries is plain NO.
Regarding the detailed query for 2nd home loan, You need to preclose old loan first then only You can apply for fresh loan with SBI. Why do you want to purchase 2nd home? Can we discuss it in detail, if you wish so?
thanks
Ashal
Hello Ashal,
Thanks for the answer.
My current home is 1BHK. I am leaving with parents and six months ago i blessed with baby girl. So it could be difficult to adjust for 2 family (parents, me and wife with daughter) in 1BHK.
So i want to go for bigger home. Say 2BHK or 3BHK if it is within budget.
But, why do you want to know the reason behind it? Do you have any specific feedback on owning 2nd home?
Thanks in advance for your answer.
Best regards,
Prakash Dumbre.
Dear Prakash, Yes, I want to discuss to tell you that till the old loan is not closed officially, your loan eligibility ‘ll not be enough for the new loan. So first close the old loan by adjusting the available balance to the drawing power. To this you need to visit your your Loan serving Branch. But before that, please do a survey for new home & check what price you w’d have to pay & are you having enough money for it i.e. down-payment from your own pocket + loan amount?
Thanks
Ashal
Hello Ashal,
Yes, You are right. Currently, after closing my account, i will not have enough money for down payment.
For this I have some plans as follows,
– I will not close my current max gain account even if book balance is zero till i haven’t found my property so that i will be able to manage some down payment amount.
– Also, I am looking for under construction property so that i would get some time manage part of down payment till the time of possession.
Thanks for your answers.
Bye
Best regards,
Prakash Dumbre.
Dear Prakash, Frankly speaking, till the time you do not have total money = Dp of old loan + down payment for new house, you can not purchase the new house. So wait till down payment money is available to you. My dear friend, if the Idea is to pay down payment from parked surplus, the balance amount in Max Gain ‘ll become negative & you can not close your loan then. 🙂
Thanks
Ashal
Hi Ashal,
I too have the same problem where I don’t have the transaction rights on the OD account and therefore cannot transfer money from OD a/c to SB a/C. Full disbursal is done and I have been following up with the branch manager since a week but he just doesn’t know how to activate the transaction rights. Now my question is :
The user id which I use to log on to SBI is the SB user id but of course I have the viewing rights for the OD account and I have been successfully able to tx money from SB to OD account multiple times (Funds transfer to own account). Once I get the transaction rights on OD, should I still be able to use the same SB internet banking user id to transfer money from OD a/c to SB a/c using the Funds transfer to own a/c section?
The branch manager was proposing that they will give me a new internet banking kit for the OD account so that I get the transaction rights on the OD account. Even if this works, I am not very keen to maintain 2 different user id’s – one each for SB a/c and OD a/c. But is this the way transaction rights on OD a/c should work or should I be able to use the SB user id for transferring money from OD a/c to SB a/c?
Regards,
Gaurav Jain
Dear Gaurav, thanks for writing in. first of all, please do tell me, the branch of SB account & Loan serving are same or different?
thanks
Ashal
Thanks Ashal for the quick response.
The branch manager confirmed that both are same but I too felt that it could be culprit. When I log on and check, the SB branch name shows up as Saraswati Vihar but the OD a/c branch shows up as RACPC Rohini. So I guess I should have the same branch name for both OD and SB a/c, right?
Also in either case, if you could also let me know the answer to the question which I originally posted, I could use that info when I talk to RACPC person and the branch manager as neither of them are aware on how exactly is this all supposed to be working.
An update from today’s conversation with RACPC. I confirmed with RACPC on the branch code to which my OD a/c is associated and she confirmed that it is the Saraswati vihar branch code which is 09083. So this mapping is correct but still when I log on to onlinesbi.com, the branch name for the OD account shows up as RACPC Rohini 😦
Dear Gaurav, please confirm that loan account is opened under old CIF for SB Account or new CIF. As the customer Data is common, the loan account ‘ll be available to you in viewing only mode within your existing rights for old SB account. I think the CIF is new for loan account & for this you w’d have to avail a separate netbanking ID. You like it or not but that’s how it ‘ll be done for you. 🙂
thanks
Ashal
Well you were right. On visiting the branch, I got to know that the SB a/c was opened against my wife’s CIF and the OD a/c was opened against mine which caused this issue. Nevertheless I got yet another internet banking kit (for OD) and I can make transactions from this new internet id.
Dear Gaurav, thanks for the update.
Thanks
Ashal
Another ? for u -> I had taken the full disbursement of 29,96,912 Rs for a loan tenure of 171 months on 22nd June ’13 (it was actually a takeover case). I have parked around a surplus of 22 lakh INR in the OD account (gradually deposited over few days span). My first EMI of 33000 got deducted on 10th July. Till date there were 2 interest deductions -> 1593 on 24th June and 5670 on 30th June.
I noticed today that my drawing power has decreased to 29,71,409 Rs (a decrease of 25,503 Rs). This obviously isn’t correct, right? As per the amortization schedule, the principal amount for the first month would have been close to 8000 Rs and the drawing power should have got deducted by 8000 Rs. Instead of crediting the interest savings to my OD account, SBI seems to have adjusted the interest savings on my surplus money against the drawing power which is wrong as they are partially depriving me of the liquidity which I would otherwise be getting normally with the maxgain account. If you care to share your email id with me, I could actually send you the complete OD account statement along with the screen shot for more detailed info.
I have a MAX GAIN HOME LOAN account for tenure of 20 years.
When I have approached SBI for 10 years in start of home loan they rejected and forced us to take 20 Yrs. I had no option at that time
I want to increase my EMI by reducing the Tenure to 10 Years is it possible else even
If possible i Want to change My MAX GAIN HOME LOAN account to Requalr HOME LOAN ACCOUNT.
Please do let me know the possibilities.
Dear Lalitha, May I know why are you interested to close your loan in 10Y or even early?
In case of Max Gain, once your DP is matched with the available balance, the book balance becomes zero & from hereonwards, the interest outgo ‘ll be zero. So I’m unable to understand, why are you not opting this & asking for Normal Home loan?
Thanks
Ashal
I have some surplus amount in my OD account. for some need can i withdraw that amount. and how to do that. also I had completed all disbursement.
Dear Tatya, there are 3 ways to withdraw money from your OD (Max Gain) account.
1. Using ATM card if availed by you.
2. Using cheque book, if it’s there with you. if not availed, get one today.
3. Using netbanking to transfer in either your own other accounts or into account of someone else. For this you need transaction rights for your Max Gain account if not availed already by you from your loan serving branch.
Thanks
Ashal
Hi,
If I park my surplus amount in MG account will get interest paid on this amount by bank as in case of SB account.
Thanks,
Prathap
Dear Prathap, the plain answer is no. Why? Please read the article again to understand, how Over Draft account works?
Thanks
Ashal
too good and simplified article
Dear Praveen, thanks that you found the article useful to you.
Thanks
Hi Ashal,
I have a question. Below are my MG account details.
Book Balance -6,52,221.00
Available Balance 17,09,113.00
Limit 23,61,334.00
Uncleared balance 0.00
Drawing Power 23,61,334.00
Currency INR
Rate of Interest (% p.a.) 11.7%
Lien Amount 0.00
Now if I deposit 6,52,221.00 into MG(OD) account book balance becomes 0 and Available Balance becomes 23,61,334.00. Now neither my EMI nor my tenure gets reduced. My EMI remains fixed only interest part will be come 0.
If I let my EMI run it’s course for 240 months(20Yrs), at the end of the term my loan would have got paid in full and SBI would return me Available Balance(23,61,334.00). Is this correct?
Also what I want to close the loan after 10yrs, what would be the Available Balance ?
Dear Mohit, the moment, your available balance is matched with drawing power, the interest outgo at the end of month ‘ll stop. Now the EMI ‘ll continue as it is but the interest part of your EMI is available to you for withdraw immediately after the credit of EMI into MG account. If you do want to close the loan after 5-8-10Y or anytime, please contact your loan serving branch & the staff ‘ll do needful to adjust the available balance against the outstanding loan amount at that time & thus you can close your loan as & when you want to.
Thanks
Ashal
Thanks for the prompt response.
What if I let it run for the full course i.e. 240 months?
Dear Mohit, personally I w’d like to run it for 240 months. The logic is simple, the moment, your interest outgo is zero, practically your loan liability is not hurting your financial situation. So it’s advisable to let it run for full term.
Thanks
Ashal
Ashal,
Ideally speaking is it really zero? Basically we are not earning any interest on the amount in the OD account. So i believe we are still paying interest which would be equal to the interest on any term/FD deposit ( between 6-8%), right?
cheers,
mohit
Dear Mohit, how did you reach that conclusion?
Thanks
Ashal
I am sorry maybe I am confused…
Dear Mohit, let me clarify it to you. SBI is not giving you any interest on the parked surplus. The earning to you is there in the form of reduced interest outgo against the interest already parked by you through your regular EMI. That’s how differential interest (EMI interest – actual interest) is available to you as surplus.
Thanks
Ashal
Very good article Sir. Thank you very much.
It clears all the doubts and confusion regarding SBI Max gain account.
Dear Sagar, thanks that you found the article useful to you. Please feel free to ask for any of your queries.
Thanks
Under One for the FAQ points you have mentioned the following:
“Your 2L Rs. are parked in that OD account & the interest for the very first month ‘ll be calculated on 28L Rs. & thus it ‘ll be 23334 & thus there‘ll be an interest saving of 1667 Rs. which‘ll remain available in your OD account as surplus along with your parked surplus 2L Rs. so for next month, the parked surplus amount ‘ll be 201667 Rs”
My query is as follows:
EMI = Prin + Int. That means the total EMI amount will not change. It will remain Fix.
In continuation with your example, Before parking Surplus funds, EMI 28591 = Principal 3591 + Interest 25000.
After placing surplus 2 lacs as in your above example, if there is saving of Rs. 1,667/- in interest component. In such case will the principal repayment be enhanced from 3591 to 5258 which includes saving in interest of 1667 as EMI will remain FIX. Will revised EMI be as follows:
EMI 28591 = Principal Repayment 5258 + Interest 23333
Is my understanding correct?
Dear Mahesh, No. Your Understanding is not correct. Max Gain is not like ordinary home loan, where you prepay 2L Rs. & from next month, the excess interest of 1667 Rs. become part of Principal. Here the Principal is adjusted as per your normal Loan amortization schedule. So 1667 Rs. saved interest ‘ll not be adjusted towards Principal (Drawing Power in Max Gain) but it ‘ll become part of your surplus balance (Available Balance).
Thanks
Ashal
Hello Ashal,
Thank you for such prompt response. I always thought that the EMI amount remains constant and the equation between Principal & Interest keeps changing.
Based on your response, would be correct to say that the EMI amount will change as follows:
Earlier: EMI 28591 = Principal 3591 + Interest 25000.
Assuming 2 Lacs is kept constant & there is a saving of 1667, the EMI will be as follows:
EMI 26924 = Principal 3591 + Interest 23333
Here Principal Repay Amt remains same 3591, however interest saving of Rs. 1667 from Interest of 25000. So EMI figure is reduced.
In short the EMI figure for that month will change from 28591 to 26924.
Is my understanding correct now?
Dear Mahesh, No. The EMI ‘ll not change. It ‘ll remain same i.e. 28591 from first month to 240th month. Please prepare a loan amortization sheet in exl in your PC to understand how EMI works in an amortization schedule. You ‘ll notice that Principal part keep on increasing in that each month. So Next month, it ‘ll not be same 3591 But ‘ll increase to 3984 Rs. & ‘ll keep on increasing. At the same time, the Interest which was 25000 Rs. originally in 1st month ‘ll come down to 24967 Rs. Here actual Interest ‘ll be lower than 24967 due to parked surplus.
Thanks
Ashal
Thanks for the article.
I have a max gain housing loan account with SBI which is linked with a joint account in SBI. We maintain the amount in joint account and every month, the EMI will be debited automatically from joint account and credited in loan account. I understand to get the benefit of max gain scheme we can park the surplus amount, so that interest will be less. We are confused whether to park the surplus amount in joint account or in loan account to get the benefit. Please help with this.
Dear Omana, to earn the benefit of Max Gain, you w’d have to park your surplus balance in max Gain account (OD account). To withdraw the parked amount, make sure, your transaction rights are active on your Max Gain account.
Thanks
Ashal
Dear Sir,
Sorry, the interest is 11.7% and not 10.7%
Dear Ashal Sir,
I have availed SBI maxgain home loan for purchasing a flat with 20 years tenure. I took loan for Rs. 18,00,000/-. I started remitting full EMI from February 2010 and now my OD a/c is showing Rs.- 15,33,000/ My EMI is Rs,20,927. and interest is 11.7%. I am planning to repay Rs. 6.50,000/- (with the intention of reducing my EMI) there by reducing the book balance to Rs. -9,00,000/-. Sir, will the bank reset my EMI and if yes, what will be my new EMI. I am eagerly waiting for your reply.
Thanks
Ravindran
Dear Ravindran, from which account you are paying EMIs? Why do you want to reduce your EMI?
thanks
Ashal
Thanks for this wonderful article. I do have a question w.r.t the interest rate. My max gain housing loan amount is 25 lacs and the interest rate was 8.5% before, but last month interest rate got changed to 11.7%. My max gain scheme and the interest % is same as in the screen shot given in this article. I’m not sure why the interest rate became 11.7 even though sbi website says its 9.95% if the loan amount is less that 25 lakhs.could you please help me understand this.
Dear Ajeesh, thanks for writing in. As of now your Loan ROi is linked with BPLR. first of all, please contact your loan serving branch for siwtching your linking from PLR to base rate. At the same time, please ask there for ROi conversion from 11.7% to 9.95%. for this rate conversion to 9.95%, SBi ‘l demand a conversion fee 2 0.56% of your existing loan amount. Please pay that & you ‘ll get the new ROI of 9.95%.
thanks
Ashal
Thanks for the quick reply. Is it worth doing the ROI conversion now. Also how is this ROI conversion fee calculated. If I do the ROI conversion now, 3 yrs later do I have to convert again?
Thanks,
Ajeesh
Dear Ajeesh, the ROI conversion fee ‘ll be calculated on your as on date DP. The current new ROI is the one of the lowest point in terms of spread over base rate (0.25%). So you may not need one more interest rate cut after 3Y from here onwards. Your ROI ‘ll move here onwards with base rate which is very transparent than PLR.
Thanks
Ashal
Thank you so much Ashal
Hi Ashal,
Thank for doing such a fabulous service!
Nothing confused me like Maxgain sofar. My question
Your 2L Rs. are parked in that OD account & the interest for the very first month ‘ll be calculated on 28L Rs. & thus it ‘ll be 23334 & thus there‘ll be an interest saving of 1667 Rs. which‘ll remain available in your OD account as surplus along with your parked surplus 2L Rs. so for next month, the parked surplus amount ‘ll be 201667 Rs.
So for a next month – the intrest will be reduce on 201667 ?
So, what ever interest I gain will help in reducing more interest again ? It’s like recurring ?
Thanks,
Rajesh
Dear Rajesh, let’s understand what happened in first month after your EMI credit into Max Gain. Rs. 3951 from the EMI ‘ll be adjusted towards your basic loan amount (your drawing power) immediately. So the DP ‘ll come down from 3000000 to 2996049. Now what’ll be the Book balance?
You already know Book balance = DP – Available balance = 2996049 – 201667 = 2794382
Now next month the interest ‘ll be charged on this 2794382 Rs. amount.
So what’ll be the actual interest = 2794382*10/1200 = 23287
Interest as per loan amortization schedule = 24967
Saved Interest = 24967 – 23287 = 1680 Rs.
So after 2nd month end, the surplus balance = 201667 + 1680 = 203347.
That’s how months after months, your interest ‘ll add up into your surplus balance.
Please do note the above is a simplified calculation. Actual interest saving ‘ll be a bit more due to EMI’s interest amount lying into max Gain from EMI date to month end & it ‘ll also help a bit to reduce daily book balance.
Thanks
Ashal
>If I’m parking some money on monthly basis or in lump sum, will >my loan term come down or EMI go down?
>No. Neither your EMI ‘ll come down nor your loan term
If I am not at all withdrawing addtional money parked, then obviously loan term will reduce. Am I right ?
Dear Ramesh, in case of Max Gain, neither your EMI nor your loan term reduces. The only thing reduces is the interest outgo. In the above example against the parking of 2L Rs. as surplus, the interest outgo is 23333 Rs. Not 25000 Rs.
Thanks
Ashal
thanks Ashal for swift response.
Yes I agree that interest outgo will reduce and if I am not at all withdrawing that 2lakh(e.g), obviously more amount of principal will get reduce, in turn loan term will reduce. Is my understanding wrong ?
Dear Ramesh, please read the article again. Due to parked surplus amount, you are saving interest outgo but this saved interest is not adjusted towards principal. This saved interest becomes part of already available surplus & thus for next month, the saving of interest is more. You are not paying back your loan early. In fact, it’s like running your loan without interest nor at low interest for your full loan term.
Thanks
Ashal
Thanks Ashal
Now I will rephrase my question. In Maxgain , what is the procedure for addtional payment to deduct principal ( for e.g my EMI is 19k and I am ready to pay 25K per month to close the loan early)? From your answer I understand that I should not park addtional 6k in my OD account… Instead how can I reduce the addtional 6k to reduce from the principal ?
Dear Ramesh, if you are not paying interest, why do you want to close the loan early? Please tell me the benefit of your action?
Thanks
Ashal
Hi Ashal
I was sanctioned 20lk loan on 07-05-2013 with 20yr term and my ECS for EMI deuction will start from 10-06-2013 only. In between I got surplus money and I transferred 50k to my OD account. I will not need that money at all and permantely I want use that 50k as to partial prepayment of loan. If I use SBI maxgain calculator, it says that maxgain tenure of loan saved is for 1.4years. Hence I understand that loan term reduced which is contra with your answer that loan term will not reduce. It means that I have not understand properly. What is the real impact of addtional money we paid to OD account and at the same time if we are not getting reduced loan term ?
Dear Ashal,
It means better to close the loan when book balance is zero and I don’t need any money from OD surplus(Available Balance), right?. Book balance will never become positive (it runs from negative to zero or zero to negative).
If interest outgo is zero entire EMI will reflect in DP?
So, If I put more money than my outstanding (DP) amount then it will not give any benefit, right?
Thanks for clarrifying
Dear Gobi, actually the amount can go positive in Max Gain but you ‘ll not earn any interest on positive balance. That’s why it’s not beneficial to keep positive balance i.e. money more than your drawing power at any point of time.
Thanks
Ashal
Dear Ramesh, which max Gain calculator you are using which is telling that loan term ‘ll come down by 1.4Y. It’s not true. The loan term ‘ll remain same. The benefit to you ‘ll be in terms of reduced interest pay out. If you are not paying interest, does it matter to you that loan is running for 10Y or 30Y?
Thanks
Ashal
Hi Ashal
I used this calculator
https://www.google.co.in/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&cad=rja&ved=0CCkQFjAA&url=http%3A%2F%2Fwww.team-bhp.com%2Fforum%2Fattachments%2Fshifting-gears%2F914307d1334037287-sbi-home-loan-how-long-took-maxgain.xls&ei=YLOwUfydNsjqrAfq5oHQDw&usg=AFQjCNFAddNrhLCYuDQJ3_7DLP-gvMA07w&sig2=8azQcU-GTcwy4MuQY8FTDQ&bvm=bv.47534661,d.bmk
Details:
Loan sanctioned :20l ; ROI-9.95%
date:07-05-13
EMI starting date:10-06-2013
now I paid 78k on 28-05-13 & 50k on 04-06-13; interest debit on 31/05/13 is 13545
Now I did not want that 128k deposited in OD a/c and in term do i get the benefit of loan reduction in tenure? if no, what other benefit I will get now ?
Dear Ramesh, let’s calculate a bit. For 20L Rs. loan amount, what ‘lll be the interest for 1st month?
The full interest ‘ll be 16584 Rs.
Now as you do have a surplus of 128000 Rs, the loan balance for the purpose of interest calculation ‘ll be 1872000 Rs.
So interest on 18.72L Rs. = 15522
Now instead of paying 16584 Rs. from your regular EMI, you ‘ll pay 15522 Rs. as interest. The remaining interest amount (16584-15522 = 1062 Rs.) ‘ll be added into your already available surplus balance & for next month it ‘ll be 129062 Rs. That’s how your actual interest outgo ‘ll be lower than your loan amortization scheduled interest.
I have calculated plain numbers. Based upon the EMI date & the amount of interest part of EMI also lying in OD account (from 10th June to 30 June), the actual interest saving ‘ll be a bit more. Now do tell me if you are paying less interest than SBI was supposed to earn from you, are you in benefit or not? This is the benefit which ‘ll accrue to you. For an imaginary scenario, after 4Y if your available balance matches with the actual loan balance (drawing power), the interest outgo ‘ll stop. Now it does not matter to you that loan is to be run for remaining 16Y or 26Y as interest outgo is zero.
Thanks
Ashal
Dear Ashal
Thanks for the detailed explanation.. now I understood. One more question.
My first month EMI was on 10th of June and money wad deducted from ICICI a/c , but not showing as credit in SBI OD account like I parked money.
LEt me know whether EMI paid thru ECS will reflect in SBI OD account or not
Dear Ramesh, please wait a day for EMi to reflect in your OD account.
Dear Ramesh, the calculator shared by you is wrong on the count that it does not represent the true case of Max Gain as no chnage happens in your loan term in actual.
Thanks
Ashal
Hi Ashal,
Great Article !!
I have one question – If I start FULL EMI for under construction property, what happens to the extra amount which is getting accumulated in MaxGain as result of less interest charged during partial disbursement.
Can this extra amount which appears as “Available Balance” be considered as “surplus amount” and can I withdraw it once I get transactional rights from SBI ?
Regards,
Saurabh
Dear Saurabh, the surplus amount thus created from your full EMIs can be withdraw by you after the full disbursal of loan is over. You can withdraw online using netbanking or through cheque book or ATM card as you w’d like to withdraw.
thanks
Ashal
Hi Anshal,
Thanks for your posts and answers. They are highly enlightening.
I have myself taken a loan from SBI (easy maxgain)and full disbursement has not has been done till now. It will take another 6-7 months for the construction to be complete by the builder. Once the full disbursement is done , I will be able be able to avail the benefit of Maxgain scheme (Interest saving + liquidity of the surplus paid).
My doubt is as follows: During the current phase , I have some extra cash , which I keep paying to my loan (apart from Pre EMI which I am paying) every month. I can see my available balance increasing after the payment. I know , this extra cash paid money is not liquid and I can’t use it , until the full disbursement is not done. But surely , once the full disbursement is done , there will be some available balance in my account. Can I use it , immediately after the full disbursement for the house furniture and interiors purpose ? In other words , is it better to save money for house interior now separately or deposit the money in loan account and take it out at that time from the OD account (to save some interest)?
Thanks
gaurav
Dear Gaurav, Yes after the full disbursal, you can withdraw the surplus amount either through cheque book or through netbanking. You w’d have to apply for transaction rights activation to your loan serving branch. Viewing rights can be availed right now.
Thanks
Ashal
Dear Ashal,
The article posted by you is very informative.In fact, today itself i have submitted my home loan applciation under this scheme.
While applying for the loan, i was told that i will have to take some insurance policy equivalent to the loan amount being sanctioned. The loan advisor suggested me to go for SBI smart sheild. I read about it on the net and got to know that this scheme does not have any maturity benefit. Can you please suggest some insurance policy which can protect my loan amount and also has some maturity value ?
regards,
Sawan
Dear Sawan, there are too many policies to fulfill your need. But the most important question is can you afford the prem? Don’t go by my words. Please check the prem. for your loan amount policy. Say your loan is 30L Rs. what ‘ll be the prem. for you in anyone of the policy from SBI Life.
Shubh Nivesh
Saral life
Smart Income Protect
Smart Money Back Insurance
I ‘ll wait for your findings. you need not to contact any SBI staff for prem. quotes of the above policies. you can calculate on your own from
http://www.sbilife.co.in/sbilife/content/9_2805
Thanks
Ashal
Thanks for explaining SBI MaxGain loan.
I have a question. Lets say I get a loan for 25 lk for 5 years…In 2 years, I am able to park 25lk in the SB account for the reminder of the term. Now, my entire EMI will start going towards my principal. So, this will reduce my loan term too. isnt it?
Also, is there any limit on how much I can repay from my loan?
Dear Jaiice, I’m moving my blog to the below site. please repost your query there.
http://www.ideasforwealth.in
Thanks
Ashal
Dear Ashal,
I’ve a query with regard to Max Gain. I’ve 2 max gain OD accounts for my home loans and it is linked to my SB account. When i login to my net banking i can see all my accounts as transaction accounts and I’ve some surplus amount parked in one of OD account.(Available balance is > 0 ..correct me if m looking at wrong place). Now that said when I go to transfer window in netbanking I see that I can transfer funds only from my SB account to OD accounts and not vice versa. The concerned person in the branch says i’ve been given with transaction rights and CIF for all three are same.( Again I think my housing loan and SB account branches are different though both are SBI and are located in the same building!!)
Can you please throw more light on what could the situation be and solution please?
–Thanks
Subramanya
Dear Subbu, please contact the loan serving branch for activation of transaction rights on your loan account. Once Tr. rights are active, you ‘ll be able to do what you are asking for.
thanks
Ashal
Hello Ashal,
Great article. I would also like to know the benefits of maxgain account (other than the liquidity part). For example, you have mentioned there will not be any reduction in EMI or Loan Tenure. Then, how do we as a customer benefit? Eg. If we made a pre-payment of 2L on 30L loan in the 1st year of the loan, we have the liquidity to withdraw that 2L+interest saved in the future of the loan term, but suppose if you never need that 2L rupees in future then what is the benefit? In that case, a normal home loan might be advantageous where you will reduce the loan term. Let me know if I am thinking in the wrong direction.
Thanks,
Vivek
Dear Vivek, I’m moving my blog to my site. Please repost your query here.
http://www.ideasforwealth.in
Thanks
Ashal
You rock always!!! I saved lot of interest by parking surplus amount in my MG. As you suggested i park my full salary into MG and my daily expense goes on credit card. This strategy save lot of money.
Dear Anup, thanks for writing in. I’m happy that you are reaping the full benefit of Max Gain. Please keep earning it. 🙂
Thanks
Ashal
Hello Ashal,
It’s really a very good FAQ guide.. I think this should be shared with SBI staff 🙂 One more clarification needed, for the Case 2 example mentioned above i.e.
Your 2L Rs. are parked in that OD account & the interest for the very first month ‘ll be calculated on 28L Rs. & thus it ‘ll be 23334 & thus there‘ll be an interest saving of 1667 Rs. which‘ll remain available in your OD account as surplus along with your parked surplus 2L Rs. so for next month, the parked surplus amount ‘ll be 201667 Rs
What is my withdrwal power at this point? Is that only 2L or 201667 Rs.? I mean can I withdraw the interest saved due to surplus?
If I withdraw 201667 , will there be any interest on 1667 Rs.?
Thanks & Regards
Hanumant.
Dear Hanumant, thanks for writing in. The withdrawing power in 2nd month is 201667 Rs. for you. Now interestingly, if you withdraw full 201667 Rs. the book balance ‘ll change from 2794382 to 2996049. How?
Drawing power after principal adjustment is 3000000 – 3951 = 2996049
Book balance = DP – available balance = 2996049 – 201667 = 2794382
Now if you are withdrawing the full available balance, the book balance ‘ll match with DP (2996049).
Thanks
Ashal
Great Article Ashal!!!….
Regards Nitin
Thanks Nitin. Please keep posting your queries.
Thanks
Ashal
Hi Ashal, Recently I transferred my home loan from HDFC to SBI Maxgain reading your blogs, Detailed explanation on SBI Max Gain. Great..
Dear Somnath, I’m happy to know that my posts were able to help you out in your decision. Please keep visiting here & keep asking your queries.
Thanks
Ashal
Hi Ashal, one question I have linked by SBI Max Gain (MG) Account to my SBI Saving Account (SB) and also transferred
Rs 1 Lac to my MG account from my SB Account through net-banking which was successfully transferred. But unable to transfer back the amount from SB Acc to SBI MG Account. Please suggest can it possible to transfer money between both the account Vice-verse
Thanks
Somnath
Dear Somnath, please contact your loan serving branch to activate transactions rights on your MG account. Only after activation of transactions rights you ‘ll be able to do the reverse transaction i.e. from MG to SB account.
Thanks
Ashal
Great..Ashal this is very useful.
Dear Keshav, thanks for the reading & appreciating. Please feel free to discuss & use the info of the article either for yourself or for your friend circle.
Thanks
Ashal
Hey ashal
awesome article 🙂
Cheers
Jeetu Ojha
Thanks Jeetandar. Please feel free to post any comment, query on the above article. Be it for yourself or for your friends.
Thanks
Ashal