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It makes sense as your home loan can increase its interest rate and pretty soon you're paying far more interest than principal, or after some years more interest than your actual emi

Also you may want to reduce your debt for some reason such as preparing to leave a job.

In case you missed it, IT saving limit on Home Loan interest has been raised to 2 lakhs from existing 1.5 lakhs. Similarly, savings under section 80C (including Home Loan Principal) has been increased from 1 lakh to 1.5 lakhs.

In my case, if I don't add my pre-payments against the actual Home Loan, I will not be able to use this extra 50k benefit in increase of 80C.

Hope this clarifies my query.

Oh, I totally forgot about the changes in the IT limits. Thanks for informing. Yes in that case, for 30% bracket, it makes sense to save on principal paid.

My Maxgain HL's full disbursement is done this month. Now transactions from OD has been enabled and I have started accumulating all my deposits and savings money into the OD account to save on interest.

So far I have been paying only the interest part per month, and now I need to start with full EMI payments.

Question: How do the system recognize an EMI payment? I am asking because I can freely deposit any amount anytime I wish into the Loan account.

My EMI is roughly 32000, but I am planning to transfer close to 1 lakh into the OD per month. This is currently planned to be done through the SBI savings account of mine, in the same bank. If I transfer say Rs 1L into my loan account before EMI date, will the system treat 32000 as EMI and rest as surplus payment?

There is a term called as "Book balance" in the OD account/ Max gain account. The system verifies that before the interest is applied and then computes and deducts from your EMI amount. Remaining amount goes to principal component and further reduces your book balance for next month.
Hope this helps.

Regards,
Anup C

Thanks. I am aware that interest is computed at the end of the month on "Book balance", and also that EMI minus Principal minus Interest goes on as Available Balance to reduce my Book Balance further.

Question in other words - Is it ok to just make a transfer of any amount above the stipulated EMI amount from my SBI savings account to the Loan account before the EMI payment date every month? Will this register as my EMI payment? Or should there be a transfer of the exact EMI amount, and rest of the money has to be transferred seperately?

Question back to you - are you given an option of transferring the EMI amount yourself. It's always an auto-deduct/ debit, hence whatever amount you transfer will only be considered as additional parking of funds and will be used for computation on interest only.
This amount that you transfer will not be taken towards EMI.

I am still to pay my first EMI so I am unclear on what should be the answer to that. So you are saying that I need to ensure there is a minimum of 32K in my savings before the EMI date and the system will take it from there as EMI? Will this happen automatically without a standing instruction?

Yes, you need to maintain that balance in the account that you have given during loan application.
Meanwhile, you would have signed and got a paper (ECS Mandate form) signed by your bank. If so then the amount will be directly debited without you giving a SI in the system.
I also suggest you to check with your loan processing officer what has been the mode of EMI deduction for your loan.
Don't end up with a defaulting on loan EMI.

ECS mandate is by the bank to deduct. - always considered by all banks while approving a house/car/ any loan.
SI is an instruction that you give to your bank to deduct from your account regularly. - it is an option for you.

Yes, I had done this, but it is scheduled to start from September 2015 onwards only. My HL was fully disbursed before the end of morotorium period because the construction is complete.

So, till September EMI payment has to be done manually(?), I need to check with my loan officer and confirm this.

Thanks for your inputs! :thumbs up

UPDATE: I talked to the loan processing official in SBI. He says that, as long as I have surplus amount in my OD account, I need not worry about making an "EMI Payment" per se. This means that if I have surplus amount greater than the EMI amount in my OD a/c, then the system will deduct the principal part as well as the interest part from it and that's it.

However, If I had given an ECS mandate form and if the source account doesn't have enough money in it on the date of payment, then there will be a fine levied becuase of ECS failure. I will still not default my loan payment if there is enough surplus amount in the OD account. The loan a/c will still be good.

So, if there is surplus amount in the OD account which is more than [Principal + Interest] deductible for that month, I need not even make any payment to the loan account for that entire month.

This is what the official told. If you ask me, this makes sense and it is the most logical thing for the system to do.

Slightly OT:

Those who are planning to take home loan from ICICI Bank, please be aware that they have now removed all online access to homeloan details including amortization schedule, statement and other details. They also dont send any of these over email on request. Customer is expected to take time off and visit one of the home loan branches and stand in line to get even a statement. I am yet to figure out why have they done this considering most banks are adding more features into their websites.

May be a temporary phenomenon? If this is their plan, then it would simply be more hassle to the customers and nothing else!

By the way, HL interest rates going down? My SBI Maxgain interest rate is seen reduced from 10.15 to 10%.

Seems it's not a temporary phenomenon.
I am planning to take SBI max gain in next few days. so, was searching on this when I stumbled on to ICICI's new money making plan..

http://www.icicibank.com/Personal-Ba...e-charges.page

Check the link, they are charging 100/- flat for Amortisation Schedule and Statement of Account which were available online at free of cost earlier!! :deadhorse

My freinds wants to avail SBI Maxgain HL. Just wanted to know if it is possible to show the documents of a land which he owns as the Collateral for the loan. This is not the land in which he is constructing the house.

If this can be shown, will the bank possess the original doucments of that land until the loan closure or can he still possess the original by any chance? Just wanted to know what is the norm?