What is Difference Between Home Loan Overdrafts and Regular Loans?

When you pick a bank to borrow a home loan from, you look at various parameters like interest rate, type of interest rate (fixed, floating, semi-fixed), tenure and eligibility of the loan.

If you are looking for a home loan currently, you also consider home loan overdraft facility. If you are someone with an irregular income, the overdraft provision can be helpful, especially if you are if you are uncertain of a future emergency funding that you may require.

For example, if you get a lumpsum payment of Rs 2 lakh and use it to prepay your home loan, after the cycle of 24 EMIs, your principal amount will be reduced by Rs 2 lakh. However, if require money for a medical emergency in the following month, you cannot retract the money paid towards the home loan as it is debited permanently from the pending balance.

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