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Overdraft Facility Calculator

Navigating through the countless of financial decisions required when managing a home loan can be daunting. Among the various tools and facilities available to borrowers, the overdraft facility stands out for its flexibility and potential cost savings. But how do you determine if it’s right for you, or calculate its impact on your loan? We have the Overdraft Facility Calculator, a vital tool for anyone considering, or currently managing, a home loan with an overdraft option.

What is an Overdraft Facility?

An overdraft facility is a financial arrangement that allows you to withdraw more money from your account than what is available, up to an agreed limit. When applied to home loans, this means you can pay extra into your loan account, reducing the interest owed, and withdraw the surplus funds when needed. This flexibility makes the overdraft facility a powerful tool in your financial arsenal, offering both convenience and the opportunity to save on interest payments.

The Essentials of Home Loan Overdraft

Understanding the basics of home loans, including the types available and their features, is crucial. Traditional home loans are straightforward, offering fixed or variable interest rates over a set repayment period. Overdraft facility loans, on the other hand, add a layer of flexibility, allowing you to adjust your repayments and potentially save on interest, depending on how you manage the facility.

How Overdraft Facility Calculators Work?

These calculators are designed to help you understand the potential savings and costs associated with using an overdraft facility with your home loan. You’ve to input details such as your loan amount, interest rate, and the additional payments you can afford. Then the calculator provides you with a snapshot of how the overdraft could affect your loan term and interest paid.

Benefits Of Using an Overdraft Facility Calculator

Interest SavingsBy making extra repayments into your overdraft account, you reduce the principal balance faster, thereby saving on interest costs over the life of the loan.
FlexibilityThe overdraft facility allows you to access additional funds up to a pre-approved limit, offering flexibility for unexpected expenses or investment opportunities.
Financial PlanningUsing an Overdraft Facility Calculator helps in effective financial planning by providing a clear picture of how additional repayments impact your loan term and interest.
Budget ManagementIt encourages better budget management by showing the benefits of allocating extra funds towards your home loan, helping you make informed decisions about your finances.
Customized ScenariosThe calculator allows you to input different repayment scenarios, helping you understand the impact of various financial strategies on your home loan.
Debt ReductionBy effectively using the overdraft facility, you can reduce your overall debt level faster, leading to financial freedom sooner.
Cost TransparencyThe calculator provides transparency about the costs associated

How to Use Our Overdraft (OD) Calculator?

Gather your loan details

Before you begin, make sure you have all the necessary details of your home loan at hand. This includes your loan amount, interest rate, loan term, and any additional repayments you’re currently making or planning to make.

Input your Loan Amount

Enter the total amount of your home loan into the overdraft facility calculator. This should be the principal amount you borrowed or currently owe.

Specify the interest rate

Input the annual interest rate of your home loan. If you have a variable rate, use your current rate or the average rate you expect over the loan term.

Loan Term

Enter the original term of your home loan, typically in years.

Overdraft Details

Enter the amount you plan to deposit into the overdraft account above your regular home loan repayments on a monthly basis.

Analyze the results

After inputting all the required information, the calculator will show you how the additional repayments will affect your loan. Look for the new estimated payoff date, the total interest saved, and how much sooner you could be debt-free.

Adjust and Experiment

One of the great features of an OD calculator is the ability to adjust your extra repayment amounts. This is to see how even small changes can have a big impact over time. Experiment with different figures to find a balance that works for your budget and financial goals.


Scenario without Overdraft Facility

  • Home Loan Amount: INR 50,00,000
  • Interest Rate: 10% per annum
  • Loan Term: 20 years

Without making extra repayments or utilizing an overdraft facility, the monthly repayment amount would be approximately INR 48,251. This results in a total payment of INR 1,15,80,224 over 20 years, out of which INR 65,80,224 would be interest payments.

Scenario With Using Overdraft Facility

Now, let’s say you decide to use an overdraft facility with your home loan. You’re able to put an extra INR 5,00,000 in your OD account. This not only reduces your principal faster but also decreases the amount of interest charged over the life of the loan.

  • New Effective Principal: Rs. 50,00,000 – Rs. 5,00,000 = Rs. 45,00,000
  • New Interest Amount: Rs. 41,85,194

The total interest paid over the life of the loan decreases significantly to around INR 41,85,194. This saves approximately INR 23,95,065 in interest payments compared to the scenario without using an overdraft facility.

  • New Loan Term: Approximately 15 years
  • Total Interest: Approximately INR 41,85,194
  • Interest Savings: INR 65,80,224 – INR 41,85,194 = INR 23,95,065


The Overdraft Facility Calculator stands out as a pivotal tool in managing your home loan. By understanding and utilizing this calculator, you’re taking a proactive step towards optimizing your loan repayments and enhancing your financial health. Remember, every bit extra you repay on your loan can significantly reduce the amount of interest you pay over the life of the loan and shorten your loan term.

Making informed decisions about your home loan and overdraft facility is crucial to your financial wellbeing. Let our Credit Dharma experts guide you with expertise and insight, ensuring that you maximize the benefits of your financial decisions.

Frequently Asked Questions

What is an Overdraft Facility?

An Overdraft (OD) facility in a home loan is a feature that allows you to deposit extra money into your loan account, beyond your regular mortgage repayments. This reduces the loan balance temporarily, decreasing the interest charged. You can withdraw the extra funds if needed, offering flexibility while potentially saving on interest and shortening the loan term.

Can using an overdraft facility really save me money on my home loan?

Yes, by depositing extra funds into your overdraft account, you reduce the principal amount of your loan more quickly than scheduled. This reduction in the principal balance results in lower interest charges, potentially saving you a significant amount of money over the life of your loan. The actual savings will depend on the amount of extra funds you deposit and how long they remain in the account.

How often should I use the Overdraft Facility Calculator?

It’s a good idea to use the calculator periodically. Especially if there are significant changes in your financial situation, interest rates. Or if you’re planning to deposit a lump sum into your overdraft account. Regularly reviewing your loan and potential savings can help you stay on track with your financial goals.

Is it complicated to use an Overdraft Facility Calculator?

Not at all. Most Overdraft Facility Calculators are user-friendly. They require only basic information about your loan, such as the loan amount, interest rate, term, and the amount of extra money you plan to deposit. By inputting this information, the calculator can show you how using the facility could affect your loan term and interest payments.

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