Home loan overdraft facility: Eligibility, documents, interest rate, how to get it

The first step is to identify lenders that offer overdraft facilities. Not all financial institutions or banks provide this option, so it is crucial to conduct thorough research.

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Prospective borrowers must meet the eligibility criteria. This includes factors such as creditworthiness, income stability, and the value of the property being financed.

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The borrower initiates the application process. During this stage, it’s essential to express interest in the overdraft facility and understand the associated terms and conditions.

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The lender evaluates the borrower’s financial profile and assesses the feasibility based on the credit history and repayment capacity of the borrower.

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Completing the necessary documentation is a critical phase. Borrowers must provide proof of income, property documents, and other standard documents.

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On successful evaluation and documentation, the lender approves the home loan with an overdraft feature. The sanctioned amount is then disbursed.

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Surplus funds in the linked account offset the interest on the outstanding amount. Interest savings can lead to faster repayment of principal, reducing the loan tenure.

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Borrowers can withdraw and deposit funds from the linked account at their convenience. While this option offers flexibility, borrowers should be mindful of any associated charges or fees.

(Disclaimer: The opinions expressed in this column are those of the writer. The facts and opinions expressed here do not reflect the views of www.economictimes.com.)

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