Insurance on Home Loan

[ramakrishnakurudagi]

Hello All,
I recently bought a home loan of around 75 Lakhs for 15 years duration in SBI. I would like to know what is the best term life insurance for covering this loan in case of uncertainities that includes untimely death, disability and also importantly in case of loss of Job some duration. can some one suggest good insurance please ?

 

[rupa22]

Hi Ramkrishana,

As you have a home loan from SBI, I thought that knowledge of their max gain facility would be beneficial to you.

Exploring the SBI Home Loan MaxGain Facility: A Smart Way to Save

When it comes to home loans, the State Bank of India (SBI) offers a unique and innovative product called the SBI Home Loan MaxGain Facility. This facility combines the benefits of a home loan and a savings account, giving borrowers the flexibility to manage their finances more efficiently. Let's dive into what the SBI Home Loan MaxGain Facility is all about and how it can be advantageous for you.

What is the SBI Home Loan MaxGain Facility?​

The SBI Home Loan MaxGain Facility is essentially a home loan linked to a savings account. It allows borrowers to park their surplus funds in a linked savings account, which can be withdrawn anytime. The outstanding loan amount is reduced by the balance maintained in this account, and interest is charged only on the net loan amount (outstanding loan amount minus the balance in the savings account).

Key Features and Benefits​

1. Interest Savings:The primary benefit of the MaxGain facility is the potential for significant interest savings. By depositing surplus funds into the linked savings account, the effective loan balance is reduced, thereby decreasing the interest payable.
2. Liquidity and Flexibility:Unlike a regular home loan where prepayments are often locked in, MaxGain provides the flexibility to withdraw the deposited surplus funds whenever needed. This ensures that you have liquidity for other financial needs without compromising your interest savings.
3. Overdraft Facility:The linked savings account acts as an overdraft account. This means you can deposit and withdraw funds as per your convenience, making it a versatile tool for managing finances.
4. No Prepayment Charges:SBI does not charge any penalties for prepayments or withdrawals from the MaxGain account. This allows you to reduce your loan liability without worrying about additional costs.
5. Monthly Reducing Balance:The interest is calculated on a daily reducing balance basis, which means any surplus funds deposited immediately reduce the principal amount on which interest is calculated.

How Does It Work?​

Here’s a simplified example to illustrate how the MaxGain facility works:

• Loan Amount: ₹50,00,000
• Interest Rate: 8% per annum
• Surplus Funds in MaxGain Account: ₹10,00,000

In this scenario, the interest will be calculated on the effective loan balance of ₹40,00,000 (₹50,00,000 - ₹10,00,000) instead of the full ₹50,00,000. This reduction in the effective loan amount results in substantial interest savings over the loan tenure.

Who Should Opt for MaxGain?​

• Individuals with Variable Income: If you have a fluctuating income, such as business owners or freelancers, the MaxGain facility allows you to park surplus funds and withdraw them as needed, providing financial stability.
• Those with Frequent Surplus Funds: If you regularly receive bonuses, incentives, or have other sources of surplus income, MaxGain can help you reduce your loan interest while keeping your money accessible.
• Financially Savvy Individuals: If you prefer managing your finances actively and want to maximize your savings, the MaxGain facility offers the tools and flexibility to do so.

Conclusion​

The SBI Home Loan MaxGain Facility is a smart financial product that offers a blend of savings and loan benefits. By leveraging this facility, borrowers can enjoy interest savings, liquidity, and flexibility in managing their finances. Whether you have variable income, frequent surplus funds, or simply want to make the most of your money, MaxGain can be a valuable addition to your financial strategy.

If you're considering a home loan with SBI, it's worth exploring the MaxGain facility to see how it can help you achieve your financial goals while minimizing your interest burden.

 

[ramakrishnakurudagi]

My question is related to Insurance for the home loan coverage. I already took the loan and now I am looking for good Term life insurance that covers this loan amount including when loss of job.

 

[zacobite]

Hello All,
I recently bought a home loan of around 75 Lakhs for 15 years duration in SBI. I would like to know what is the best term life insurance for covering this loan in case of uncertainities that includes untimely death, disability and also importantly in case of loss of Job some duration. can some one suggest good insurance please ?

Simple term insurance online from any good co. 75 L coverage.. or more if u can.. Aegon / Kotak / IPru / Max.. all gd

 

[AlertsByVivek]

I bought the same pure term life. Coz loan product insurance mostly reducing balance. Which added burden. It's not the smart decision though. You must have atleast pure term insurance. It saves you from every loan you got and bike policies car policies.

 

[zacobite]

I bought the same pure term life. Coz loan product insurance mostly reducing balance. Which added burden. It's not the smart decision though. You must have atleast pure term insurance. It saves you from every loan you got and bike policies car policies.

yes.. perfect