Nov 28, 2015 06:21 PM
5773 Views
For those who see home loan re-payment as a pain each month, ‘Maxgain Home Loan’, offered by the State Bank of India is a convenient way to save and reduce your interest burden. Simply by clubbing your liquid finances with the home loan account, you can reduce interest burden substantially.
To understand the difference between a normal home loan and a Maxgain home loan, let’s consider the case of Mr. Mehta;
Mr. Mehta recently took a Maxgain home loan from SBI. His outstanding principal is 25 lakhs at an interest rate of 10% for a term of 20 years.
Let’s see how having a Maxgain home loan benefits him in different situations;
Case 1:
Mr. Mehta recently received a sum of Rs. 10 lakhs. See how he can use this sum in the case of a Maxgain home loan and a normal home loan to bring his interest burden down;
Normal Home Loan:
He can deposit the entire sum of 10 lakhs in the home loan account and prepay his loan, reducing his loan amount to Rs. 15 lakhs. Subsequently reducing his interest burden, but leading to a loss of liquidity.
For making the deposit, he will have to go through a long procedure of filling a deposit form, paying a processing fee and will have to make at least 2 visits to the bank.
Maxgain Home Loan:
Here, he can park the sum of 10 lakhs in his home loan account, reducing the principal amount on which interest is payable to Rs. 15 lakhs.
This means that he will have to pay interest only on the difference of principal amount and the surplus 10 lakhs and not the original principal amount of 25 lakhs.
More over, he can withdraw this sum any time simply by en-cashing a cheque or using a debit card, maintaining liquidity of the deposit of 10 lakhs!
