Home Loan Overdraft: Save Interest, Keep Cash Accessible

• A home loan overdraft facility allows borrowers to save interest costs and shorten loan tenure by parking surplus funds in a linked account.
• Unlike traditional prepayments, funds deposited in an overdraft account remain accessible for withdrawal when needed.
• Interest is calculated daily on the reducing balance, meaning interest is charged only on the difference between the total loan and the cash in the overdraft account.
• The main drawback is that overdraft facilities typically come with a slightly higher interest rate (0.10% to 0.30% more) than standard home loans.
• This facility is ideal for individuals with regular surplus cash flow, such as business owners or self-employed professionals, who want to reduce interest costs while maintaining liquidity.