SBI Maxgain is an overdraft facility, which also operates like a savings bank or a current account. Customers availing home loan under this scheme get an overdraft by SBI of an amount equivalent to the loan amount sanctioned. When there is surplus money, the borrower can deposit it in the SBI Maxgain Account as loan payment and reduce the interest burden. Since the account also operates as a regular savings/current account, the borrower is allowed to withdraw the surplus parked as and when required. For this purpose, the borrower is also given a cheque book, ATM-cum-Debit Card and net banking facility.
SBI Maxgain Home Loan Interest Rates 2020
Maxgain Interest Rates for Salaried
|Loan Amount (Floating Rate of Interest)||Women||Others|
|Loans above Rs 20.00 Lacs & upto Rs 30.00 Lacs||8.75%||8.80%|
|Loans above Rs 30 lacs & upto Rs 75 lacs||9.00%||9.05%|
|loans above Rs 75 lacs & upto Rs 3 crs||9.15%||9.20%|
|Loan above Rs. 3 crore||9.50%||9.55%|
Maxgain Interest Rates for Self-Employed
|Loan Amount (Floating Rate of Interest)||Women||Others|
|Loans above Rs 20.00 lacs & upto Rs 30.00 lacs||8.95%||9.00%|
|Loans above Rs 30 lacs & upto Rs 75 lacs||9.20%||9.25%|
|Loans above Rs 75 lacs & upto Rs 3 crs||9.35%||9.40%|
|Loan above Rs. 3 crore||9.70%||9.85%|
What is SBI Maxgain Account?
Basically, a SBI Maxgain account is an overdraft (OD) account. An OD account is a credit line provided by the bank in lieu of the amount that has been deposited. The underlying collateral for this account would be the home that the individual has given up as collateral for the purpose of the home loan. This amount can be withdrawn at any time and can be used for a variety of purposes such as bill payments or other financial emergencies.
This scheme is meant to ease the burden of payment on an individual’s home loan. The amount deposited will be deducted from the home loan amount. The rate of interest charged would be on the new principal amount which would have decreased. So the new EMI would be less than the previous one. Through this process, an account holder would save a significant amount of money. This amount can be withdrawn at any time depending on the individual’s needs.
This account can be compared to a fixed deposit account. A lot of people invest their money in fixed deposits because they get reasonable returns on their investment with no real risk to the principal invested. In case of a fixed deposit, people have to lock their money in for a period of 5 years in order to get tax deduction benefits. A better option, in this case, would be to invest the money in a Maxgain account. The money invested can be withdrawn at any time and the rate of interest is usually also higher by 1%-3%. This would make it a much better investment.
The rate of interest applicable to a SBI Maxgain Loan is a floating one. This means that the interest rate fluctuates based on market conditions and shifts in RBI policies. Due to this effect, the EMI amount/tenure may change, depending on external factors. This makes it a little unpredictable as it is difficult to predict market behaviour with any sort of certainty. This rate of interest works in a more predictable manner when the economy is stable for extended periods of time.
Advantages of SBI Maxgain Home Loan
SBI Maxgain scheme offers a variety of benefits to their users. These benefits have been discussed below.
- Parking Surplus Money: It would be advisable for people to start using this account for parking all their surplus wealth in this account. This will be beneficial in many ways as the money invested can grow and can be used later for many purposes as per their requirement. The money also helps reduce the burden of the home loan repayment. It will decrease the principal amount on which the interest is charged and thus the overall interest amount would also decrease.
- No Extra Charge: There is no extra charge for opening a Maxgain account. All that an applicant needs to do is to submit the necessary documents and their account will be opened. But it must be noted that this account can only be opened when someone has taken a home loan of at least Rs. 20 lakh.
- Withdrawal at Any Time: The amount deposited in a Maxgain account can be withdrawn at any point in time. The money can be withdrawn for several reasons that include alternative investment options and unexpected expenses.
- Lowers Interest on Home Loan: The amount deposited in the Maxgain amount is deducted from the total loan amount. This reduces the amount of interest as the principal amount has now decreased. Thus, the account holder saves a lot of money.
- Multi-Purpose Use: The Maxgain account can be used for a variety of purposes using different instruments. It can be used to pay bills such as electricity, shopping, credit card payments etc. Both cheque books and net banking facilities are also available, just as with a regular savings or current account. This opens up new financial options for an individual.
- Tax-Free Investment: The money deposited in the Maxgain account would be tax-free. But it must be noted that tax-deduction will apply only to the amount equivalent to the home loan amount.
- ATM Services: An individual can also avail ATM services on a Maxgain account. This makes the withdrawal of cash from the account much easier. However, it must be noted that the cash withdrawn from another bank’s ATM will be charged to the Maxgain account as an overdraft account and not as a savings account.
Disadvantages of SBI Maxgain Home Loan
Every coin has two sides. Similarly, there are a few disadvantages that when it comes to investing in a Maxgain account:
- Lack of Awareness: Most people, including SBI home loan account holders, do not have much awareness about Maxgain. It takes a good bit of explanation and clarification to get people to understand the benefits of this scheme. The intricacies of the scheme can be quite complex for the average person. Therefore, some people may not catch on as quickly as they might expect.
- Less Tax Benefit: The tax benefit would not hold if the investment is in excess of the home loan amount. Therefore, people should not assume that all their money deposited in this account is tax-deductible. They need to redo their homework for other tax saving instruments.
SBI Maxgain Home Loan – Eligibility and Documentation
The eligibility for a Maxgain account is the same as a SBI home loan eligibility. The following documents need to be deposited in order to complete the SBI MaxGain Loan application:
Proofs: All the necessary proofs regarding an individual’s identity, age, residence, and photographs have to be submitted. This is a standard protocol used to ascertain the identity of an applicant and to authenticate the information provided by them.
Financial Background: The credit score is obtained by the bank but salary slips (or proof of income in case of salaried) and tax returns for the past 2 financial years (for self-employed) need to be submitted. These documents point to the financial health of the individual. The tax returns are checked to ensure that the applicant’s accounts are up-to-date.