SBI Maxgain: Home Loan Having OD (Overdraft) Advantage

A few private banks have introduced Schemes extending an option to Home Loan borrowers to link the loan account with their SB Account / Current Account with a view to reducing the borrower’s interest burden, by facilitating automatic transfer of balances in their SB Account / Current Account above a threshold level to their Home Loan Account.

The transfer of temporary surplus funds to the Home Loan account brings down the interest cost of the borrower.

SBI Maxgain Scheme Details

In view of the foregoing, a new Home Loan product which has been christened as "SBI Maxgain", has been launched in 2005.

Eligibility for SBI Maxgain

Both Existing / Prospective customers having minimum balance of Rs. 5000/- in their SB / CA.

SBI Max-Gain Amount

Minimum Rs. 5 Lakhs, Maximum Rs. 30 lakhs.

SBI Max-Gain Facility

1. Overdraft can be used as a running account with ATM Card, INB, Cheque Book etc. after full disbursement of the loan and completion of required formalities including creation of equitable mortgage.
2. Drawing power reduced on monthly basis.
3. Customers will get the benefit by saving Home Loan Interest.

SBI Maxgain Home Loan Eligibility

As applicable to Home Loans

Additional Eligibility Criteria

Facility available for new Home Loans of Rs.5 lacs and above from applicants who are:

1. Existing customers with minimum balance of Rs. 5000/- in their SB / CA. Stipulation of minimum balance not applicable to customers whose salaries are regularly credited to this account and repayments are proposed to be made from this account.
2. Prospective customers who open SB / CA with an initial minimum deposit of Rs. 5000/-. Stipulation of initial minimum deposit not applicable if salary of the applicant is proposed to be credited to this SB / CA.

Margin for SBI Maxgain Home Loan

As applicable to Home Loans

Loan Amount of SBI Maxgain Home Loan

1. Minimum: Rs.5 Lacs
2. Maximum: Rs 30 lacs. Staff and loans availed by staff jointly with their spouse are exempted from this restriction.

Type of SBI Maxgain Home Loan

Overdraft: Under ‘SBI – Maxgain’ Home Loans will be sanctioned as an Overdraft. While customers will have to remit the Equated Monthly Installments (EMI) as in the case of usual Home Loans, the Drawing Power on the Overdraft will be reduced on monthly basis to the extent of the principal component of the EMI so that the Overdraft is liquidated at the end of the loan tenure. (Interest component of the EMI remitted will service the interest obligations).

Disbursal and Drawing power of SBI Max-Gain Loan

1. Until full disbursement of the loan:
   1. Credits not to be allowed in the a/c.
   2. DP fixed in the a/c to correspond to borrower’s eligibility depending on the progress of work completed less stipulated margin. Outstandings should not exceed DP.
2. Post disbursal [cheque book, ATM- debit card, INB facility]
   1. After full disbursement of the loan and completion of required formalities including creation of equitable mortgage, borrowers will be eligible for issue of cheque book, ATM-Debit Card and Internet Banking facility for operation in the loan account. No over drawings are to be permitted in the a/c in excess of the Drawing Power.
   2. The extant instructions applicable to Home Loans, including those for interest rate, margin, repayment, penal interest, pre-closure penalty etc., will also be applicable to Loans sanctioned under “SBI – Maxgain’.

Repayement of SBI Maxgain Home Loan

As per extant instructions applicable to Home Loans.

Additional repayemt stipulations

Repayment of EMI will be paid by check-off / obtaining PDC as per extant instructions.

Security of SBI Maxgain Home Loan

Following documents on formats as specified in the Scheme circular:

1. Arrangement Letter-Annexure-A
2. Home Loan Agreement (As per Home Loan Scheme)
3. Guarantee Agreement (As per Home Loan Scheme)
4. A consolidated stamped Affidavit and Indemnity sworn before notary public/ magistrate containing relevant clauses as obtained for normal Home Loan.
5. In respect of Check-off, existing formats under regular Home Loan to be used with suitable modifications.

Service charges of SBI Maxgain Home Loan

The extant schedule of service charges applicable to Current Accounts will also be applicable to these loans.

Other Terms and Conditions of SBI Maxgain Home Loan

As per extant instructions applicable to Home Loans including those for purpose, margin, security, processing fees, interest rates, penal interest, repayment, penalty on pre-closure of loan, pre-EMI capitalisation, pre and post sanction inspection.

FAQ of SBI Maxgain Home Loan

1. Should EMI be remitted as in the case of usual housing loans?
   • Yes. While customers will have to remit the EMIs as in the usual HLs, the DP on the OD will be reduced on monthly basis to the extent of the principal component of the EMI so that the Overdraft is liquidated at the end of the loan tenure. (Interest component of the EMI remitted will service the interest obligations).
2. What details are to be given in the Certificate for Income-Tax purpose?
   • Principal Component: Branches to issue certificate for repayment of principal only to the extent of principal component of EMI remitted. Credits over and above the EMI should not be considered for issue of certificate for Income Tax purposes, as the amounts remitted could be withdrawn at any time.
   • Interest Component: Actual interest debited to the account during the financial year should be incorporated in the certificate issued for Income Tax purposes. The software for the Scheme will assist the operating functionaries to arrive at the break-up of EMI to principal and interest component for issue of certificate for Income-Tax purposes.

SBI Maxgain Product Highlights

1. Maxgain provides innovative and value added features to the generic housing loan scheme and also flexibility in its key terms and conditions.
2. Reduction in Drawing Power on a monthly basis and classification of the outstandings in the Weekly Abstract will be taken care of by the software.
3. As the loan will be an operative Current Account, borrowers will be eligible for cheque-book, ATM-Debit Card and Internet Banking facility.
4. It opens up an attractive avenue for HNI to park their temporary surplus funds and optimise their returns by significant reduction in interest cost.
5. The product to focus on High Networth Individuals (HNI), Mass Affluent segment, professionals, highly paid executives, software professionals, reputed businessmen / industrialists etc.