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How different is a home loan overdraft from a regular home loan?

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How different is a home loan overdraft from a regular home loan?

Last updated: November 8 2018
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  • #11

    #11

    Re : How different is a home loan overdraft from a regular home loan?

    Malvish ok, so it is only for people who can earn some extra money every month in some manner or those who are into businesses too. So technically it only eases the burden of the principal amount and the tenure, right?

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    • #12

      #12

      Re : How different is a home loan overdraft from a regular home loan?

      movedin yes, you can say that. It does a lot to cut down the principal amount and also the tenure.
      Talk TRUE; Talk IREF

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      • #13

        #13

        Re : How different is a home loan overdraft from a regular home loan?

        So what major thing separates a home loan overdraft from a regular home loan?

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        • #14

          #14

          Re : How different is a home loan overdraft from a regular home loan?

          What separates a home loan overdraft from a regular home loan is the liquidity that the overdraft scheme offers. In a regular home loan, part payments reduce the outstanding principal but that amount cannot be availed if needed. However, in a home loan overdraft, you can withdraw all the surplus amount available in the account.
          Talk TRUE; Talk IREF

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          • #15

            #15

            Re : How different is a home loan overdraft from a regular home loan?

            The home loan overdraft is good for double-income families and also businessmen, who are financially a little more secure than average borrowers, and have a regular flow of funds apart from their monthly expenses.

            The best part is that account holder can withdraw any or whole of the surplus amount if need arises. so they don't have to avail a personal loan to meet their need.

            The overdraft facility is not at all suitable for people who live on a budget and just manage to meet the loan EMIs every month. Such individuals should opt for a regular home loan.

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            • #16

              #16

              Re : How different is a home loan overdraft from a regular home loan?

              So why shouldn't all borrowers avail such a loan. The loan runs for many years and they never know if they get lucky or are able to save or get some surplus amount during the loan tenure. They can then pay the surplus amount right?

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              • #17

                #17

                Re : How different is a home loan overdraft from a regular home loan?

                Well, what puretalk must have intended to highlight was the fact that an home loan overdraft facility is slightly more expensive than a regular home loan and the borrower would end up paying more than average merely on the hope that he might be able to get some extra money during the tenure of the loan.
                Talk TRUE; Talk IREF

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                • #18

                  #18

                  Re : How different is a home loan overdraft from a regular home loan?

                  Malvish right! That was what I meant to say. The home loan overdraft is expensive as compared to a regular home loan. So, if the borrower is sure that he can arrange some surplus amounts over the years, then he should opt for such a facility or else not.

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                  • #19

                    #19

                    Re : How different is a home loan overdraft from a regular home loan?

                    What about other factors that should be considered while taking a home loan overdraft, like taxation and rebates and all?

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                    • #20

                      #20

                      Re : How different is a home loan overdraft from a regular home loan?

                      Well, for one, the amount that is paid apart from the emi is not eligible for the rebate under Section 80 (C), for the fact that it is not considered as a prepayment. So, there is no visible tax benefit to the borrower.
                      Talk TRUE; Talk IREF

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