Overdraft vs Regular Home Loan Account
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An overdraft account is a line of credit that allows you to overdraw your account up to a pre-approved limit. This type of account is typically used for short-term financing needs, such as covering unexpected expenses or bridging the gap between paychecks. Interest is charged on the amount overdrawn, and you only pay interest on the amount you use, not the entire limit.
A regular home loan account, on the other hand, is a long-term loan used to finance the purchase of a home or property. It is typically used to buy a property and pay it off over a period of many years. The loan is secured by the property, and the interest rate is generally fixed for a period of time.
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It would have been more useful of you had taken a numerical example to explain
High interest rate, even by 0.2% is a huge disadvantage as you rightly highlighted. Really helpful video
Most awaited video!!
Hello Gaurav, Thanks for the great video. Although I would like to correct you on a point you mentioned about SBI Max Gain
SBI Max Gain does not restrict you to withdraw fund for few criteria, It is completely flexible and lets you deposit and withdraw funds anytime. via intra bank transfer, neft or imps.
For a person who is displined its a great option to park emergency fund or any surplus fund for which they need easy liquidity
By putting these surplus funds in max gain I save on the interest which I feel is higher that any other investment to liquid fund or FD.
Because in the end money saved is money earned
+1👍
Totally agree
I agree!
@ambar921 Could you explain how the Interest payment is calculated for Income Tax benefit? My specific query is that we receive 2lacs of interest payment rebate as per IT and gradually the interest should go down yoy but can this 2L interest benefit be utilized every year by withdrawing overdraft money?
@@raxy77 your final home loan interest certificate after the financial year end would have the actual interest contribution and principal contribution for the final year
You can withdraw or deposit funds in your max gain account to keep your monthly interest to around Rs. 16666
Thank you for the wonderful explaination. Now my concept is clear
Informative
Many Thanks
Well Explained sir👏
What about the Tax rebate on HOMELOAN , can same be availed under this OD
Please can u elaborate this? With calculation of 50 or 25 lac loan
If money is withdrawn from overdraft account, what is the rate and mode of interest charged?
How to repay the money withdrawn from overdraft account?
Eagerly waiting for mutual fund monday
What if in od loan i want to prepay and want to permanently pay off part of principal amount? Coz i dont want that amount to be shown to me that you have this money come withdraw. Basically i want to enjoy part in of and also want to make part prepayment.
For Home Loan OD against FD is far better than EMI Home Loan. OD = flexible pay (7% FD k liye 7.25-7.75% and Limit long time), Home Loan = Have to Pay Every Month with More interest Rate (10-18% but limited EMI).
Bank of Baroda has same scheme named as BOB advantage
If I stop home loan and pay through overdraft then will home loan will be completely become my property and no overdraft bank have any rights on that??
Sir ...Hdfc gives overdraft facility against hdfc home loan?
Can i create od account for hdfc bnk?
Nice video
Hi, I already have an existing SBI maxgain home loan account. I have to open a new homeloan account. Do you think its good to have multiple maxgain accounts? OR should I go with a term loan account this time? Please suggest.
Why do you want to open new maxgain account ? you can withdraw from the existing maxgain account and continue that !!
Does it makes sense to put surplus money (1lac) in FD at 7% instead of maxgain at 10%? do we actually earn 10% by putting surplus money in maxgain? also what happens if you interest is zero in annual maxgain interest certificate?
As of today BOB advantage home loan which comes under this overdraft loan type gives home loan at same rate of normal home loan (8.5/8.6 %) so IMO better than SBI max gain. Also IMO yeah parking money in this OD home loan saving acc is better than FD. Interest certificate would show interest paid on principal (as obvious, if you keep same amt of money in OD home loan saving acc as your principal amt then you are not paying any interest & in that case interest certi would show 0 & then you won't be able to claim it in income tax etc)
Good Information.
Question about the Bank of Baroda overdraft account: What happens to the interest saved? Is it applued towards the principle, or does it remain deposited in the overdraft account and you can withdraw that?
There will be no interest earned on amount parked in linked saving acc (with overdraft home loan acc) in case of BOB advantage home loan scheme. That amt which is parked in saving acc would be deducted from your original home loan principan amt & you will be paying home loan interest ideally on your original principal amt - your parked saving amt. This is counted on daily basis
HI Please let us know if we opt for Overdraft facility instead of normal home loan. ROI will be fixed or flexible. Suppose if RBI increases repo rate will it have the effect on overdraft facility home loan interest rate.
To the best of my knowledge it's only on flexible rates
Sir housing loan over draft can I claim in income tax
What about the tax benefits ?
Will that be still the same with overdraft facility ?
Yeah whatever amt of interest which you pay on your principal amt of loan can be used for income tax (2 lakh limit on interest & 1.5 lakh limit of, 80c for principal amt)
Gaurav,bank of india is offering me overdraft facility with same rate 8.3% as plain home loan...in that case this is good right,and yes I have to check for annual renewal charges if they have any..
I think this is an excellent deal ...need your advice..
One imp point missed Sirji in disadvantages"you will not earn any interest on funds that are parked in OD account"
All the surplus amount parked in the OD account like SBI maxgain will lower the principle amount, so you only pay interest on loan principle amount minus the parked amount.. thus it saves you interest... Your comment is true when the parked amount exceeds the total unpaid loan amount.. I.e. suppose you park 25 lacs in a home loan OD account of amount 20 lacs, then 5 lacs won't earn you any interest..
Interest saved is interest earned..on and the same thing, right
I need 10 lakh rs for buying a 2nd hand car.
Getting loan at 9.8% and getting an OD limit of 10 lakh @9.7 %.
What should I choose?
If my loan amount is 10 lakh for 5 years emi is 21100 per month , should I take loan or use OD and repay it with 21100 per month like I would have done with car loan.
What should I choose ?
Please explain clearly alog with calculations
Yes pls
Hello sir, I really liked your video, want to connect with you for my financial planning. Thanks
You r a good stock analyst, you analyse successful marketing strategies for various companies, pls do some innovation to promote your business. We bored to get to promo code.
What if I took a SBI Max gain loan of 25 Lakh and deposite 25 Lakh in my overdraft account. Then monthly instalment will be EMI free? Can you help me with a calculator to demo the scenario? Thank you!
In this case entire monthly EMI will go towards principal component.
In this case, your EMI will be a surplus in the OD account. You can keep withdrawing the EMI amount from the OD account, until you want to close the loan.
Sir Mera loan pass hua hai 3 lakh ka bank bol raha hai 1.5 lakh ka term loan or 1.5 lakh cc karna hoga sir isme kist kitne ki banegi
Koun sa bank hai
Sir,. I have 5L, is it to better to earn FD interest of that amnt OR better to deposit in maxgain to save home loan interest on 5L.
Which is a better option ?
But sir overdraft me interest is very high
can we put more than sanction home loan in. od account?
Like I have home loan amount around 10L and home load interest is 10% then can I put 11 L in OD account to gain extra intetest?
But it's like a trap isn't it?
Kch samjh ni aaya
Not comprehensive
nahi accha laga video , bahot casually explained.
Wrong explanation
worst explanation
Prepayment in initial years of the REGULAR loan significantly reduces interest component overall. Is it same as keeping the same amount in the OVERDRAFT type of loan (associated savings account), and if we do not widthdraw it, does it affect the same way and reduces overall interest component?