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All about home saver loan and excel based calculator

Sometimes one feels cheated when having a home loan from any bank. Point is that the rate of interest is fluctuating and not fixed. This means if rate of interest goes up, one need to pay either more in EMI or the tenure of the EMI will increase. And often one has the spare money but he thinks either to prepay the loan or take it in emergency funds.

So in this contrast he is unable to do anything and in last found himself cheated because he is paying interest on the loan whereas he has the spare money of which no interest is generated.

So this is a new concept of home loan which is called Home Saver Loan.

What is Home Saver Loan?
In this concept, the borrower allowed to open a linked current account to the home loan account and transfer the extra money in this account. This money will be deducted while calculating the interest on home loan. The average monthly balance will be considered and the money will be deducted from the home loan taken while calculating the home loan interest.

However the borrower will not get any interest on the money in the current account. And typically the home saver loan will cost some high rate of interest from the general home loan around 0.51% more. Like if the home loan rate of interest is 11%, then the home saver loan rate of interest will be around 11.5%.
This facility is providing by the leader banks such as SBI, IDBI bank, Citibank, HSBC, Standard chartered bank.

 How it works
It works with the basic principal. Suppose A has the home loan of 20 lakh for 20 years with 10.5% rate of interest.
A is paying an EMI of 19968 rupees. In this calculation A will pay 2792223 rupees of interest for a 20 lakh rupees home loan in 20 years.

If we look in the second option which is home saver loan, in the same condition, the rate of interest will go up to 11% and EMI will be 20644 rupees. If A has the extra money of 3 lakh which he deposited in the current linked account, then he needs to pay only 154 EMI out of 240 and the interest amount paid will be 1107552 rupees.

So A will save 1684671 rupees of interest amount choosing the second option.

1- One can easy withdraw the amount from the current account if needed.
2- One can choose for recurring deposit (RD) in this account like a small part of the salary.
3- It saves a lot of money.

1- One needs to pay more rate of interest.
2- No interest on current account amount.
3- Banks has threshold limit for this account which may be differ to differ and threshold limit is according to the annually salary like Slandered Chartered Bank has threshold is Rs. 2.76 lakh per annum.

So this is an excel based home loan vs. home saver loan calculator for showing which can benefit you.

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