Super Saver Home Loans

 Worth Or Not?

Super Saver Home Loans

You repay in the form of EMIs - but the overdraft facility is reduced each month to the extent of the principal component of the EMI, so that it becomes zero by term-end.

 These loans are sanctioned as an overdraft from a linked current account. 

How Loans Work

 It allows the borrower to save on interest payments (or repay the loan faster) by parking any surplus funds into the linked bank account.

The Pros

Unlike a regular loan prepayment where the money is technically gone, the excess balance can be withdrawn anytime. 

Bank balances tend to idle away in a savings account. Even if you park surpluses for a few days, you earn a better yield than in a bank FD.

 The Cons

Also, since interest saved is not tax-deductible, you need to plan your repayments in order to not lose out on annual tax benefits.

Interest rates on Super-Saver loans are a tad higher (0.5- 1%) than the regular home loans.

The Verdict

Super-Saver loans can save interest payments by letting you park excess funds into its linked account - but they are also costlier, and unless you have substantial excess balances for long periods, they don’t make sense.



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