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Overdraft Loan Against Property

While there are many types of loans to choose from today, an overdraft and a loan against property remain two of the most popular loan options. You can utilise a loan against property to cover big-time expenses like business expansion, house renovation, and paying a surgery bill. An overdraft against property (or OD loan against property) enables you to access a small amount of money whenever you need it. So, before opting for either of these options, ensure that you evaluate the one that matches your current needs.

What is Overdraft Loan Against Property?

An overdraft against property or loan against property overdraft is a secured type of credit that is a hybrid of a secured loan and an overdraft facility. With an overdraft loan against property, you can withdraw a certain amount from your pre-approved loan amount as an overdraft. You can also make prepayments anytime you like.

The amount you receive as an overdraft is typically 70% to 75% of the property’s market value. Before approving your overdraft request, your lender will assess your credit score and debt repayment records.

Features of an Overdraft Against Property

Below are some of the features of an overdraft against property:

1. Credit Limit

The credit limit for an overdraft against property varies from borrower to borrower. Lenders set the limit based on credit score, credit history, and so on.

2. Interest Rate

Lenders charge interest on the amount of overdraft that you utilize. In the event of a payment default, we add the interest to the principal amount due for the next month.

3. Repayment

You do not repay an overdraft against property through equated monthly instalments (EMIs) like a regular loan. You can repay whenever you want, but if your lender requests that you pay at some point, you must obey.

4. Co-Applicants

If you and someone else avails of an overdraft, then you both will repay the overdraft regardless of the amount borrowed. If either of you defaults, then the other person is responsible for paying the total amount. You should note that the lender will repossess your collateral if you both cannot repay the debt.

What is a Loan Against Property?

A loan against property, or LAP, is a secured mortgage loan that you avail of to cover a large expense. There are no end-use restrictions and it always comes with a long repayment tenor.

You can use the loan against eligibility calculator to determine your maximum loan amount.

Features of a Loan Against Property

Below are the key features of this loan type:

  • You can provide a residential or commercial property as collateral.
  • The amount you applied for is paid into your account immediately upon approval.
  • You can use the loan amount for anything ranging from business expansion to paying a child’s tuition fees.

Differences Between a Loan Against Property and an Overdraft Against Property

Below are the major differences between the above financial options:

1. Interest Rate

While the loan against property interest rate is charged on the principal amount, the overdraft against property interest is charged on only the amount withdrawn.

2. Calculation of Interest

For a loan against property, the interest is calculated monthly. For the overdraft, the interest is calculated per day and you only pay the principal amount with extra funds or toward the tenor’s end.

3. EMIs

You pay both parts of the EMIs for a loan against property while you pay only the interest charged when you use the overdraft against the property facility.

Take a Loan the Easy Way Today

Thanks to the many financial options available at Bajaj Housing Finance, you can now choose the one that satisfies your needs. As long as you meet your desired loan eligibility criteria, you can be sure to get approval. Begin your application process here today.