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At times, you may need additional funds to tackle your personal or business expenses. However, if you have already taken a home loan, the chances of getting another loan become slim, and it isn’t advisable as well. Repaying a home loan in itself can be a long-term and challenging commitment. What you can do in such a situation is avail of a home loan overdraft facility.
The home loan overdraft facility, also known as a home loan OD facility, is a unique facility offered by home loan lenders to their customers. Under the overdraft facility on home loan, they allow their customers to deposit or withdraw funds from a pre-determined home loan OD limit. The borrowers can then repay the withdrawn amount along with the accrued interest by depositing it into the home loan overdraft account.
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You can avail of our overdraft facility on home loan and enjoy a high OD limit for your emergency financial requirements. However, for that, you’re required to meet our home loan overdraft eligibility criteria, which include:
Your age should be between 24 years to 65 years
You must be a salaried professional or self-employed individual
You should have taken a home loan from us against a housing property
Your credit score should be 750 or more
As an existing home loan customer with Tata Capital, you can avail of our home loan overdraft facility to meet your various financial requirements. Here’s how you can benefit from the OD facility on home loan:
You might be wondering how does an overdraft facility work. As you already know, the OD facility allows you to get a loan for your emergency requirements. However, the repayment isn’t made in the form of Equated Monthly Installments or EMIs, as is the case with other types of loans. Instead, you can repay the withdrawn amount by depositing it back into your OD account in single or multiple installments.
It works in the same manner as it does on a savings or current account. Just in the case of a home loan OD facility, your home loan account is linked to a dedicated OD account. You can withdraw funds from this account as and when needed through a debit card or direct transfer. This is typically done to tackle unforeseen expenses, such as medical bills, house repairs, working capital, etc. You can also use your home loan OD account to withdraw funds for planned events such as a wedding or a vacation.
When you withdraw funds from your home loan OD account, it is added to your home loan outstanding balance. Consequently, it starts attracting interest at the same rate that you are paying on your home loan. And then, when you deposit the money back into your OD account, it is treated as a home loan prepayment and gets subtracted from your outstanding balance. Hence, the interest on the withdrawn amount is charged only for the duration for which it was used. The example below will help you understand this in a better way.
Suppose you have taken a home loan of a certain amount from a lender offering a home loan overdraft facility. The interest rate levied on your home loan amount is 9% per annum, and your current home loan outstanding balance is Rs. 23 lakh. Now, you withdraw Rs. 3 lakh from your home loan OD account during an emergency. This amount would be added to your home loan outstanding balance, which means that it will become Rs. 26 lakh, and this entire amount will attract interest at the same rate, i.e., 9% per annum, until you deposit the withdrawn amount back into your OD account.
Note that the maximum amount that you can withdraw from your home loan OD account will depend on your OD limit. For instance, if your OD limit is Rs. 15 lakh, you can withdraw a maximum of Rs. 15 lakh from your home loan OD account in single or multiple installments.
Applying for a home loan OD facility with Tata Capital is easy and convenient. If you’ve already taken a home loan with us, you can apply for an overdraft on home loan in the following ways:
Applying for a home loan OD facility with Tata Capital is easy and convenient. If you’ve already taken a home loan with us, you can apply for an overdraft on home loan in the following ways:
Suppose you have taken a home loan to purchase a house in which you are living happily with your loved ones. You’ve used your life savings to make the down payment for your house and are happy to pay a major chunk of your income as home loan EMIs. Then, suddenly there is a medical emergency at your house, and you need significant finances to deal with it. What will you do in such a situation? You neither have your savings to fall upon nor do you want the risk of taking a new loan.
This is where a home loan overdraft facility comes to the rescue. It allows you to withdraw extra funds from a pre-determined loan limit on your home loan account in the case of a financial emergency. When you borrow a home loan from a lender offering a home loan overdraft facility, you get a separate OD account attached to your home loan account. You can withdraw funds from this home loan OD account as and when you need. The withdrawn amount can be repaid at any time, along with the accrued interest, by depositing it back into your OD account.
The primary purpose of a home loan overdraft facility is to provide you with a flexible source of funds that can be used to meet diverse financial requirements. It can be an ideal solution to acquire funds for personal emergency expenses, such as paying hospital bills, undertaking home repairs, purchasing new appliances, etc. You can also withdraw funds from your home loan OD account to meet your business requirements. For example, when you face a shortage of working capital or need money to buy more inventory or equipment, you can take the help of the home loan OD facility to get access to finances.
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The interest rate on a home loan overdraft facility is the same as that of a home loan. Usually, it ranges between 9% to 13% per annum in India. With Tata Capital, you can enjoy the lowest interest rates on your overdraft loans, starting from just 8.75% per annum.
Lenders may levy some common charges on overdraft loans, including processing charges, legal charges, cheque collection charges, and annual maintenance charges. These charges are usually deducted from the loan limit. You can view the charges levied on your home loan OD in the loan agreement.
The maximum amount you can borrow from your home loan OD account depends on your loan limit. This limit is pre-determined by the lender based on your home loan amount, age, credit score, monthly income, and several other factors. With Tata Capital, you can enjoy the home loan overdraft facility with a maximum OD limit of Rs. 2 crores.
You can pay your overdraft loan in a single lump-sum payment or multiple installments. However, these payments have to be made within a fixed tenure. At Tata Capital, we provide a home loan overdraft facility with a maximum tenure of up to 15 years.
You can make full or partial payments on your overdraft loan by making deposits into your OD account. As soon as you make the payment, your outstanding balance gets adjusted accordingly.
Different lenders ask for different eligibility requirements for providing a home loan overdraft facility. These may be based on your age, monthly income, credit score, and employment status. To avail of a home loan OD facility with Tata Capital, you are required to meet the following criteria:
You need to submit the following documents to avail of our home loan overdraft facility:
We may also ask for some additional documents at the time of loan processing.
At Tata Capital, we process housing loan applications as soon as we receive them. Once you have submitted your loan application and the documents, you need to wait for three to five working days. We also provide instant approvals for a home loan overdraft facility to eligible customers.
At Tata Capital, we allow you to make online applications for loans from the convenience of your home or office. If you have taken a home loan against a property from us and can fulfill our eligibility criteria, you can apply for the home loan overdraft facility online by visiting our website.
Yes. You can withdraw funds from your home loan overdraft account and use them to meet your business-related financial requirements. With our home loan overdraft facility, you can purchase costly business equipment, procure inventory, clear invoice payments, and do much more.
You must try to pay your overdraft loan as soon as possible. If you keep your overdraft pending for a long period, you may incur a high interest amount. In case you fail to pay your overdraft loan, you may face legal implications and even lose possession of your property.
The credit score is a crucial factor that determines your eligibility to get loans. You need to have a minimum credit score of 750 to enjoy a home loan overdraft facility with Tata Capital. You can contact our customer care helpline for more details.
A home loan with an overdraft facility does not qualify for tax benefits. However, you can use your home loan overdraft facility to prepay your home loan before the end of its tenure and save on your interest outgo. You won’t have to pay any prepayment charges for this.
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