for un-initiated there is a kind of home loan which SBI and Standard charter used to give .. not sure if any bank is still giving it.

In this,
- Bank will charge 0.5% above the usual bank rate
you can park your surplus fund (salary, short term money etc) in the bank account and the home loan interest will be charged on net of loan amount minus the surplus fund.

let me explain:
- Say you took a loan of 20 lakhs.
- you have 4 lakh surplus lying in your savings bank account linked to this loan.

As per RBI guideline interest is charged/ paid on daily basis. So the home loan interest will be charged on 20-4 lakhs = 16 lakhs for that month.

You use that savings bank account for your daily payment on groceries/ bills and houshold spending. Also, if you have some extra money kept for future investment, it can be kept in the same savings account till you find suitable opportunity.

This way you reduce your interest paid on housing loan.

So my question is - is there any bank currently providing this kind of loan. If so please suggest !

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  • HSBC and Standard Chartered are the ones I know of. Not sure still available
  • HSBC, Standard Chartered and Citibank have this facility. But you need to keep atleast Rs.1 lakh to be eligible for that benefit. Any deposit of less than Rs.1 lakh will not give you any benefit. Overall this is not a great product because you are better off utilizing those surplus funds in making shor tto mid term investments as this way you can make more money than what you would have saved in interest savings.