SBI Maxgain Home Loan Account, Park Money, Higher Savings

SBI maxgain home loan account - set off high loan interest outgo tax free. Surplus amount withdrawal allowed after possession, full disbursement of loan.

Written by Anil Gupta
  By Anil Gupta          Updated  28 Dec, 19

  290    


What is SBI Maxgain Home Loan Account?

SBI maxgain is a type of home loan account that helps you park your extra money to save home loan interest. In banking terms, this is overdraft account (OD account).

When does SBI transfer money to Maxgain account?

SBI transfers money to Maxgain account immediately after your home loan has been sanctioned.

How is Maxgain Loan Payment Made to Builder?

A cheque is drawn by SBI bank from your Maxgain overdraft account in favor of the builder.
You will have to submit the developer’s demand letter to the bank to get this cheque. This process is called disbursement of loan.

What is Negative balance in Maxgain Home loan Account?

The negative balance visible in Maxgain is total sanctioned home loan amount for your property.

Will SBI charge interest of Sanctioned amount or Disbursed amount?

You will pay loan interest ONLY on the amount that has been disbursed or drawn from Maxgain OD account at any given point of time. 
You do not pay the interest on the complete balance in your OD account unless it has been disbursed.

SBI Maxgain Home Loan Calculator

How to Withdraw Money from SBI Maxgain?

You can withdraw surplus money from SBI Maxgain if these conditions are met:

  1. Property possession has been given by Builder.
  2. Full sanctioned loan has been disbursed by Bank.

SBI will issue a Cheque book and internet banking for this Maxgain OD account only when the home (property) has been registered on your name.

You will not be able to withdraw the extra money parked in Maxgain account if your property is under-construction.

How to Earn High Interest with SBI Maxgain

If you have surplus money in your any bank’s savings account, you can park it in maxgain account to save on Home Loan interest.

The normal savings account earns interest in the range of about 3-6% and then you have to pay income tax on interest earned.

Transferring money to this OD account will save you interest on your pending home loan which would be somewhere in the range of 8-12%.

Example,

You have 10,000 rupees extra sitting in your savings account earning about INR 33.3 @4% P.A. for 1 month as interest.

If you transfer this amount to your Maxgain account, you would then save INR 83.33 @10% P.A. for 1 month as interest.

A good difference of 83.33 – 33.33 = 50 rupees a month!

That is why we say: “Money saved is money earned

You would not receive the interest from SBI but this INR 83.33 would be the amount that you would NOT pay as interest on your home loan to bank. Hence, your savings on the loan interest can be counted as your income.

To add more benefit, this interest is NOT even taxed as it is your virtual income!

Do SBI Pay Interest on Positive Book Balance?

There is no interest paid out by SBI if the book balance in Maxgain account is positive.

Positive book balance in Maxgain OD account means that you have re-paid the total loan amount. There is nothing DUE from your side to bank.

If you have pre-paid the full loan i.e. much before the initial time line, it is better to close the maxgain account and get the EMIs stopped.

You have to go and close it explicitly. SBI will NOT automatically stop the EMI deduction if your book balance turns positive by way of pre-paying.

How Can Maxgain Book Balance Get Positive?

The balance in Maxgain home loan account will mostly be negative till the time you have not re-paid the loan.

There is a possibility that you have pre-paid your due balance earlier than the complete loan tenure.

Example,

If I repay the complete amount within 4 years for a loan of 10 years and do NOT stop the EMI cycle, the bank would deduct the installment and deposit it in my OD account.

Maxgain account would then start accumulating the positive balance.

Close Maxgain Home Loan Account

The only way to close the account is to re-pay the complete loan amount. Step by step process to close Maxgain Loan account for Indians living in India and NRIs.

Saving Money by Paying Less Maxgain Interest?

You have the facility of doubling up the benefits with Maxgain OD account. On one hand, you are paying lesser interest to bank on the total loan and on the other hand, you are earning more interest on your savings.

Example:

Complete Cost of Apartment35,20,000
Paid out of pocket15,20,000
Loan Applied For21,00,000
SBI Maxgain Home loan (Sanctioned amount) * – Generally lesser than what you apply for – so keep a buffer20,65,000
Maxgain OD account balance *-20,65,000
Rate of interest (Locked for first 3 years)8%,9%,9%, market rate afterwards
Rate of interest on market rate in 4th year11.75%

* values have been rounded off to nearest thousand for easier understanding

If you can transfer an amount equal to the monthly EMI each month to the Maxgain Home Loan account, you can pay lesser interest every passing month.

Now, the question arises that if I had the enough monthly income to support a higher EMI, then why I did not opt for it in the first place?

Well, the question is very good and the answer simply lies in the way SBI (or any other bank) calculate your loan eligibility.

If the eligibility just hovers around a total loan of 21 lakhs by all means, the EMI will be set up for 240 months at the rate of Rs. 17000 per month.

Since, you can use the allowances like LTA and medical (part of salary structure) which Bank did not consider for calculating loan limits, towards your savings, you can pre-pay an extra amount each month.

Also, the loan limits by bank are set keeping in mind the current salary levels of a person. The loan tenures generally span multiple years and your income stands a chance to increase.
If your income increases, it should become easier for you to pre-pay more than what was set up bank earlier.

My advice is to pre-pay as much as you can, if you cannot use the same set of money for earning more than, what you are paying as interest on the loan.

Please note that there is a substantial difference between the similar home loan products of government banks vs private banks. You should carefully understand the terms and conditions before signing any documents.


India
 






   290 Useful Questions & Answers from comments



  1. ravi
    ravi 16 Dec, 19 at 2:37 pm

    Hi Anil,
    I put a surplus amount of 200000 in the account. Book balance will reduce by 2lakh, interest will be calculated on book balance and remaining will go for the principal from emi.

    Example:
    Loan Amount ₹30,00,000.00
    Interest Rate 10
    Loan Tenure (months) 240
    EMI ₹28,950.65

    Calculation of first 6 months is as follow.

    Principal, Interest, Drawing Power, Surplus amt, Surplus Balance, Available Balance, Book Balance
    ₹0000.00 ₹0000.00 ₹30,00,000.00 ₹0.00 ₹0.00 ₹0.00 (₹30,00,000.00)
    ₹3,950.65 ₹25,000.00 ₹29,96,049.35 ₹0.00 ₹0.00 ₹0.00 (₹29,96,049.35)
    ₹3,983.57 ₹24,967.08 ₹29,92,065.78 ₹0.00 ₹0.00 ₹0.00 (₹29,92,065.78)
    ₹4,016.77 ₹24,933.88 ₹29,88,049.01 ₹0.00 ₹0.00 ₹0.00 (₹29,88,049.01)
    ₹4,050.24 ₹24,900.41 ₹29,83,998.77 ₹2,00,000.00 ₹2,00,000.00 ₹2,00,000.00 (₹27,83,998.77)
    ₹5,750.66 ₹23,199.99 ₹29,78,248.11 ₹0.00 ₹2,00,000.00 ₹2,00,000.00 (₹27,78,248.11)

    All calculations are done considering end of month.
    Only 2 lakh is withdrawal at the end of 6 month and please let me know is my understanding is correct.


  2. Veeresh
    Veeresh 6 May, 19 at 9:15 am

    Hi Anil,
    Hope you are doing good !

    My max gain OD account status as of today (6-May-2019)

    Book Balance -36,68,763
    Available Balance 0.00
    Limit 36,46,686.00
    Uncleared balance 0.00
    Drawing Power 36,46,686.00
    Currency INR
    Rate of Interest (% p.a.) 9.35%
    Lien Amount 0.00

    I had deposited surplus amount of Rs.2000/- to OD account on 5th-May-2019 & Book balance got reduced by 2000/-
    Reduced from -36,70,763 to -36,68,763. I was expecting it to show Rs.2000/- as Available balance since this is extra surplus amount being deposited apart from regular EMI.

    Note : I had received checkbook for OD account & property which i purchased is completed.

    I have below questions.

    1) why available balance is 0 ? Does this ever get updated ?

    2) If available balance going to remain 0, does it mean I would not be able to withdraw back the extra surplus amount of Rs.2000/- from OD account ?

    3) If available balance does not get updated correctly, how will I know the total surplus amount deposited till date in order to withdraw for any unforeseen requirement.


    • Anil Gupta
      Anil Gupta 6 May, 19 at 2:16 pm

      I suggest to connect with bank to ask for the details.


  3. Vinod Bhange
    Vinod Bhange 2 May, 19 at 11:17 am

    Dear Anil
    Can we give standing instruction for maxgain account for withdrawal of surplus amount every month ?
    For example I have 7 lac surplus amount in maxigain so can I give standing instruction to maxgain account say example 55 k every month for my another SBI account for next 6-7 month?


    • Anil Gupta
      Anil Gupta 2 May, 19 at 11:56 am

      I do not understand what you are trying to do here.


  4. Vinod Bhange
    Vinod Bhange 2 May, 19 at 2:29 am

    Hi anil
    Thank you for your article it’s very useful due your article I understand what is maxgain and it’s very useful for me.
    My question is debit card issued for maxgain account?
    How I can get most benefits of SBI maxigain account?
    Vinod bhange


    • Anil Gupta
      Anil Gupta 2 May, 19 at 6:54 am

      As per my last information, only cheque book is issued for Maxgain.
      You can ask the bank if they are issuing debit cards too.

      I have mentioned above as to how to make best use of maxgain account. Please read.


      • Vinod Bhange
        Vinod Bhange 2 May, 19 at 11:06 am

        Thanks Anil for reply
        Which date for EMI is best for maxigain account?


        • Anil Gupta
          Anil Gupta 2 May, 19 at 11:56 am

          I do not know which date would be best.


  5. pratik
    pratik 1 Apr, 19 at 3:07 pm

    Hi Anil,
    Thanks for the detailed article
    I’ve a question about maxgain.
    When I park some surplus amount, let’s say 1lakh for an year. So i’ll save a rough 9000 interest on my loan. This is what I understand.

    But my question is how this 9000 savings will be reflected in my account?
    1. Will the Book balance reduce by 9000?
    2. Or, my available balance will increase by 9000? Allowing me to withdraw this 9000 savings as well?

    If the second is true, that means if withdraw that 9000 from maxgain then am back to same situation as if I never deposited that surplus and the available book balance will increase again.?

    This confuses me about where the saved interest is reflected in?


    • Anil Gupta
      Anil Gupta 1 Apr, 19 at 3:07 pm

      None of (1) and (2) is true.
      The saving is in terms of interest that you NEVER paid to bank on the amount that you deposited as surplus.

      None of the balances will show it. But, since, you did not paid the interest, that’s your saving.


  6. Chandra Shekhar
    Chandra Shekhar 5 Mar, 19 at 12:35 pm

    Anil, Just wanted to say thank you as I gone through your explanation of SBI Max Gain account and your comments clearing doubts and questions, I got very comfortable now dealing with my Max gain account. A big thank you from bottom of my heart !


    • Anil Gupta
      Anil Gupta 5 Mar, 19 at 2:46 pm

      You are welcome. I am glad it helped.
      Do share the website with your friends if you think it is useful.


  7. Amol
    Amol 22 Feb, 19 at 7:03 am

    Hi Anil, Is there any rule for SBI maxgain facility so that, you can do pre-payment only for two times in tenures?
    Or what are the rules for pre-payment in SBI maxgain facility.


    • Anil Gupta
      Anil Gupta 22 Feb, 19 at 4:57 pm

      I am not aware of any such restriction on pre-payments yet. It is possible that SBI may have added new clauses. Check your bank loan papers and it should have it mentioned there.


  8. Wassi
    Wassi 5 Feb, 19 at 2:36 pm

    I have opted for SBI max gain home loan. Last month in January the book balance showed an amount of ₹2500/- . I transferred some savings in the account and brought the amount to 0 before the 31st of January. After the end of the month ,I was charged ₹64/- wherein I shouldn’t be charged an interest amount since the intrest is calculated on book balance. please let know why would I have been charged with this amount.. and will it happen every month


    • Anil Gupta
      Anil Gupta 9 Feb, 19 at 10:27 am

      The interest is charged on daily book balance. The interest for the days between your last interest debit and your payment would have been debited now.


  9. Bhupen Gopal
    Bhupen Gopal 28 Jan, 19 at 8:51 pm

    I have opted for max gain facility. I would like to know whether if I transfer lumpsum amount from my SBI savings to OD account (loan account), Can I see the balance amount under available balance.


    • Anil Gupta
      Anil Gupta 9 Feb, 19 at 10:02 am

      The amount you transfer will NOT be available for withdrawal until the load has been fully disbursed and possession has been taken.


  10. Saroj Gharat
    Saroj Gharat 14 Jan, 19 at 9:47 am

    I have taken a flat and also registered it. First disbursement from the bank was of 65% as the construction is not complete yet. Can I deposit surplus amount in my SBI max gain account and withdraw later if required?


    • Anil Gupta
      Anil Gupta 14 Jan, 19 at 10:04 am

      You can deposit now but can withdraw only if the full disbursement has been made (for full loan) and you have got the possession of the house.


      • Saroj Gharat
        Saroj Gharat 9 Feb, 19 at 10:03 am

        So better to convert to term loan account with lesser interest and convert to Max gain after possession, as we cannot make use of the surplus funds


        • Anil Gupta
          Anil Gupta 9 Feb, 19 at 10:13 am

          Your choice.
          But, if you keep extra amount in max-gain, you are NOT paying interest on that amount.
          So, it will still be better as compared to term loan with lower interest.


          • Saroj Gharat
            Saroj Gharat 9 Feb, 19 at 10:43 am

            And also I think, if I have surplus amount and I keep it in Max gain account, though I cannot withdraw it, I can still use to pay for builders next demand? Through the overdraft account


            • Anil Gupta
              Anil Gupta 10 Feb, 19 at 12:28 pm

              No, you cannot use that amount to pay builder’s demand.


              • Saroj Gharat
                Saroj Gharat 11 Feb, 19 at 8:13 am

                Oh ok. Thanks for the clarification. Also if say my approved loan is 50lakhs and I decided to take only 40lakhs from bank and rest I managed through my own contribution till possession? Can I still withdraw from overdraft account after possession?


                • Anil Gupta
                  Anil Gupta 11 Feb, 19 at 1:52 pm

                  In that case, you will have to officially send a letter to bank saying you only need 40 lakhs. They will then reduce your sanctioned amount.

                  You can then avail the max-gain facilities.


                  • Saroj Gharat
                    Saroj Gharat 12 Feb, 19 at 12:31 pm

                    Oh ok. There are minute details one needs to know. Thanks a lot for your information. One last question, when a builders demand comes, do I have to connect to bank to disburse the next demand and can I pay part from my loan account and part from my own contribution?


                    • Anil Gupta
                      Anil Gupta 12 Feb, 19 at 12:37 pm

                      As I already said, you CANNOT use the extra funds that you keep in max-gain in any way until loan is fully disbursed and possession has been taken.

                      You keep thinking of any permutation or combination, but the bottom line is you CANNOT use that money.

                      With each builder demand, you will submit the demand letter to bank and they will make the cheque.


                    • Saroj Gharat
                      Saroj Gharat 12 Feb, 19 at 3:52 pm

                      I am not saying to use the money from Max gain account. But the money one may have not deposited in Max gain. Thanks anyways.


  11. VeEm
    VeEm 14 Nov, 18 at 4:28 pm

    Hi,
    Book Balance 3,66,276.52
    Available Balance 20,34,798.52
    Limit 16,68,522.00
    Uncleared balance 0.00
    Drawing Power 16,68,522.00
    Currency INR
    Rate of Interest (% p.a.) 9.2%
    Lien Amount 0.00

    this is my current bank status.

    if i keep my account like this, then i dont pay any interest and all the EMI that is deducted from my different account will come back to this account.

    i want to know if i keep this loan open or close. if i keep loan open and in this state, then i can claim home loan tax exemption and i dont pay any emi.


    • Anil Gupta
      Anil Gupta 14 Nov, 18 at 6:51 pm

      Bank is not fool. They will soon call you to close the loan account.


      • VeEm
        VeEm 15 Nov, 18 at 12:10 pm

        i guess we should leave commenting on how bank works. coming back to my case, i have some surplus money and i have parked it in OD account, i did not close the account as i might need to move my money out again for a different purpose.

        i thought OD is give to you so that you get all these facilities.

        as per your comments, bank will call me and inform me to close my account? did this happen to anyone? why do you think so?

        appreciate your input.


        • Anil Gupta
          Anil Gupta 15 Nov, 18 at 12:25 pm

          My comments are based on real life scenario. You can read it in comments too.

          There have been instances where people have parked almost all money in max-gain OD account.
          Then, bank called them to close the account as bank was NOT earning any interest.

          I recommend to keep at-least 6 months of EMI worth of loan pending if you want to keep it active.


      • Karthick
        Karthick 16 Feb, 19 at 7:53 pm

        Hi Anil, Why or how come the Book balance is positive here? does it mean that he has totally repaid his loan and having a positive bal? if so, why drawing power is only 16.68 lacs? also will I be charged interest if my book balance is negative but available balance is positive?Thanks


        • Anil Gupta
          Anil Gupta 17 Feb, 19 at 8:19 am

          Please read the article and it has answer to this question.


  12. Ravi farare
    Ravi farare 13 Nov, 18 at 5:11 am

    Hi Anil,

    is there any benefit of doing partly pre payment as well as parking surplus together?
    Also what is the process of pre paying some amount in max gain? because when i transfer money to OD account it is treated as parked surplus. Thanks.


    • Anil Gupta
      Anil Gupta 13 Nov, 18 at 6:17 am

      It’s the same thing. You are not paying interest on the money that you have parked or ore-paid in the account anyway.

      If you do not withdraw the surplus, it will always stay in your max-gain account. Once your account balance reaches zero, you can simply ask to close the loan account.
      That’s it.


  13. Manoj Kshirsagar
    Manoj Kshirsagar 5 Oct, 18 at 4:32 am

    Hello Anil,

    My MaxGain Home Loan was sanctioned in Aug 2018, during that time MaxGain Home Loan Account holders were not eligible for Pradhan Mantri Aawas Yojna Scheme. Recently this year 2018, SBI have changed the rule and new customers taking MaxGain Home loan can take benefit of PMAY.

    I would like to know if,

    Is there any way I can take benefit of the PMAY scheme continuing MaxGain Loan? What are all possible options?

    Thank you,
    Manoj


    • Anil Gupta
      Anil Gupta 5 Oct, 18 at 5:25 am

      Hi Manoj,
      Sorry, but I am not aware of the rules related to this yojna and hence can’t guide you.
      Please check with the bank on the specific rules.


  14. Santy
    Santy 3 Oct, 18 at 8:43 am

    Very good explaination. Can you please explain what is the meaning of this transaction

    TO TRANSFER-COMM ON LOAN PROCESSING– 11500
    this happened after more than year after taking loan


    • Anil Gupta
      Anil Gupta 3 Oct, 18 at 8:48 am

      Sounds like ‘commission on loan processing’. Not sure though. Please check with bank.


  15. Aarya
    Aarya 11 Sep, 18 at 9:10 am

    Dear Sir,
    Here is my situation and i need your expert advice.

    Loan start date: Mar 2013
    Tenure 20 yrs
    Book Balance -24,95,716.00
    Available Balance 4,59,618.00
    Limit 29,55,334.00
    Drawing Power 29,55,334.00
    Rate of Interest (% p.a.) 9.2%

    I pay an EMI Rs. 44,582/month.

    I need to understand this data, i have been sending emails to the SBI but never hear back from them.

    I have some extra funds equivalent to the book balance, whats the best option i have.

    1) Should i pre-close my loan account?
    2) park this fund in the loan account and let the loan continue?
    3) others?

    Please advise.
    Thanks.


    • Anil Gupta
      Anil Gupta 11 Sep, 18 at 10:22 am

      1. Closing the loan is the first best option, if you have the equivalent amount with you.
      You start saving on interest payout immediately. Savings of 9.2% immediately!
      Your Interest pay out is bank’s income. Why not keep it with you and make it your income?

      2. Park whatever funds you have in SBI Maxgain to save 9.2% on the parked amount unless you can earn by investing these funds somewhere else (after tax).
      This off-course is better than any other bank saving account (including PPF). Think of this saving as your income and you don;t have to pay income on this saved income!
      Isn’t it awesome?


      • Aarya
        Aarya 11 Sep, 18 at 11:43 am

        Thanks a lot Anil for your valuable advice.
        I am an NRI(USA),so not sure which investment would yield me more than 9.2% in India.
        Appreciate few suggestions .


        • Anil Gupta
          Anil Gupta 11 Sep, 18 at 12:58 pm

          I would say that take 9.2% any day. This is coming in your pocket without any risk and without any tax. Why would you lokk anywhere else?


          • Aarya
            Aarya 11 Sep, 18 at 1:02 pm

            Thanks so much !! I trust you, i’ll do the same ;).


  16. sasidharan
    sasidharan 17 Jul, 18 at 8:06 am

    I am unable to calculate the total outstanding principle amount paid till now, can you please help? Based on this I will make a decision to close or continue.
    Book Balance = Rs -25,87,893

    Available Balance = Rs 11,57,107
    Limit and Drawing Power = Rs 37,45,000
    Rate of Interest (% p.a.) = 9.10%
    Balance as on 01 Jun 2018 = Rs -26,02,619 (As per monthly statement )

    Total contribution to principle amount till FY 2017-2018 = Rs 10,73,895 (starting from year 2014)
    Loan : SBI Maxgain OD
    EMI type = FULL EMI
    EMI amount = Rs 33,560

    My property is still under construction and I am expecting the completion in the year 2020.


    • Anil Gupta
      Anil Gupta 17 Jul, 18 at 10:45 am

      Your total outstanding amount towards bank changes everyday due to the daily interest that gets added.
      The Book Balance that you see in your statement (or online SBI website) is based on your last month’s interest addition.

      When you are ready to finish off the loan, visit the branch and they will tell you the exact amount that needs to be paid ‘that day’ to finish the loan.


  17. Aswani K Sharma
    Aswani K Sharma 7 Jul, 18 at 4:46 am

    Hi Anil,

    Can you please explain the below Amortization chart components…

    Months Outstanding Amt Interest Rate Interest Rate Month Drawing Power Surplus Deposit Remaining Months EMI Constant EMI Interest Component Principal Component Available Balance Book Balance
    2,400,000.00
    1 Feb-12 2,400,000.00 10.50% 0.00875 2,400,000.00 – 240 23,961.12 23,961.12 21,000.00 2,961.12 – 2,397,038.88


    • Anil Gupta
      Anil Gupta 7 Jul, 18 at 7:02 am

      Sorry, I can’t understand it clearly as the text is not formatted.

      Also, what explanation do you want? Please be specific with your question.


  18. Vidya
    Vidya 20 Jun, 18 at 6:20 am

    Hi, I have taken loan for 35 lakhs and my actual emi is around 39k. But we are paying 43k per month and also deposited around 11 lakhs in max gain Od account. so my total OD balance is 11 lakhs + 2 lakhs (Extra emi paid every month).
    Now my outstanding loan balance is 17lakhs.
    Term period : 144 months
    Interest + principal: 65 lakhs
    My doubt is, now if I pay 17 lakhs now, will my loan get closed or should I need to pay the interest separately as loan period is for 12 years?


    • Anil Gupta
      Anil Gupta 20 Jun, 18 at 7:48 am

      If you pay 17 lakhs now, Bank will ask you to close the Loan account immediately. Ideally, it is recommended to keep at-least 6 months equivalent of EMI amount pending in the loan. So, in your case, you should at-least keep 2.4 lakh loan pending to keep the loan account open and active.

      If you are okay with closing the loan account, go ahead and make the payment.


  19. Yogesh
    Yogesh 4 Jun, 18 at 3:31 am

    I have taken 27L loan for ready possession flat on Dec 2016. I am using maxgain from last yr, whenever i am parking some amount in OD account SBI is treating it as an EMI and i am unable to withdrawal it without allowing me to withdraw.


    • Anil Gupta
      Anil Gupta 4 Jun, 18 at 6:44 am

      Have you got the possession of the flat? If yes, then check with bank as to why are they not allowing you to use maxgain account features.