'Forget SIPs': Mumbai consultant shares practical hack to save lakhs on home loan EMIs

Amid the flood of financial advice from influencers, a Reddit post by a Mumbai-based loan consultant has offered a no-frills strategy to save lakhs on home loan interest — without relying on mutual funds or SIPs.

The consultant, who claims to have tie-ups with over 60 banks and NBFCs, argued that popular suggestions like investing one EMI in mutual funds to offset loan interest are “not so practical.” Instead, he emphasized the importance of understanding benchmarks such as RBLR (Repo Based Lending Rate) or RLLR (Repo Linked Lending Rate), and ensuring that reset dates for interest rates are monthly or quarterly, rather than yearly.

But the core of his advice centers around home loan overdraft (OD) products — commonly known through SBI’s “Maxgain” scheme, though available at most banks. While the rate is slightly higher than a regular home loan, the OD facility allows borrowers to park surplus funds in their account, reducing the interest burden without locking the money away.

For example, in a ₹1 crore loan with a ₹1 lakh EMI (where ₹90,000 is interest and ₹10,000 is principal), parking a lump sum of ₹1 crore in the OD account for a month could effectively wipe out the interest component, converting the entire EMI into principal repayment. Crucially, the borrower retains full liquidity, with the option to withdraw the parked funds anytime.

The post highlights how, with a bit of financial discipline and knowledge of money rotation, homeowners can shave years off their loan tenure and save lakhs in interest. “People have built crores of business over home loan OD,” the consultant noted, stressing that the method, though slightly complex, is far more practical than chasing market returns.