The home loan overdraft facility HDFC is a facility that allows you to withdraw funds even if your balance is zero. The fund release is known as overdrawn. This limit- the amount of money allowed to be withdrawn lies in the hands of the bank. It is a customised facility that might be helpful during a sudden financial crisis. This is the simplest answer to the query-what is overdraft facility in HDFC home loan. But this facility also has its own set of pros and cons like-
Get home loan services from NoBroker without paying any fee NOW
Find out your monthly payable amount to your respective bank using NoBroker’s EMI Calculator
What are the pros and cons of HDFC home loan overdraft facility?
There is a list of pros and cons of this facility like-
Pros- Lowers the interest costs of the home loan-
Under this facility, borrowers can deposit surplus funds in their home loan account. The average balance of the account linked is deducted from the loan amount while calculating the interest component. The surplus amount in this account acts like a prepayment against the outstanding amount and reduces the interest cost of the home loan.
- Flexibility to withdraw money whenever required-
Borrowers enjoy the flexibility to deposit or withdraw surplus funds from the home loan overdraft account anytime. This helps them to maintain liquidity, which would not have been possible to exercise if they opted for partial prepayment or foreclosure of the home loan.
- Helps in avoiding the prepayment penalty-
Home loan overdraft facilities help to avoid prepayment penalties. The surplus amount in the home loan overdraft account acts like a prepayment against the outstanding amount, reducing the overall cost of the home loan.
Cons
There are some cons to this facility as well like
- No tax benefit
The surplus amount in the home loan account does not come under Section 80C of the Income Tax rebate as it is not considered a pre-payment so you can enjoy no tax benefit.
- Higher interest rate
The interest rate of a home loan overdraft facility is higher than the regular one, so in the end, it might not be as beneficial as expected.
This is what I know about the home loan overdraft facility HDFC.
Read More:Maximum LTV offered under dropline overdraft in hdfc bank
What is overdraft facility in SBI home loan?
What is dropline overdraft?
Your Feedback Matters! How was this Answer?
Shifting, House?
✔
Lowest Price Quote✔
Safe Relocation✔
Professional Labour✔
Timely Pickup & Delivery
Intercity Shifting-Upto 25% Off
Check Prices
Intracity Shifting-Upto 25% Off
Check Prices
City Tempo-Upto 50% Off
Book Now
What is Overdraft Facility in HDFC Home Loan?
Shilpi
944 Views
1
2 Year
2023-04-18T11:23:05+00:00 2023-04-26T09:13:59+00:00Comment
Share