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  6 May, 19

  289    


What is SBI Maxgain Home Loan Account?

SBI Maxgain is an Over-Draft (OD) account that State Bank of India opens up for the home loan customer. Once home loan is sanctioned, the loan amount is immediately transferred to maxgain account.

SBI Home Loan Disbursement

Whenever you need to make a payment to the real estate builder (developer), the cheque is drawn by bank from Maxgain overdraft account in favor of the builder.

Maxgain Interest Payment

You will pay loan interest ONLY on the amount that has been disbursed or drawn from this OD account at any given point of time. The negative balance visible in Maxgain is total sanctioned home loan amount for your property.

You DO NOT pay the interest on the complete balance in your OD account unless it has been disbursed.

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.


Finance
 






   289 Useful Questions & Answers from comments



  1. 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.

       

  2. 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.

       

  3. 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.

           

  4. 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.

       

  5. 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.

       

  6. 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.

       

  7. 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.

       

  8. 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.

       


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