How does the repayment process work for an overdraft loan against property?

The repayment process for overdraft loans against property is usually flexible compared to regular loans. Here is an overview:

• No fixed Equated Monthly Instalment (EMI) is set. Only interest on the utilised loan amount must be paid periodically, such as monthly or quarterly.
• The principal can be repaid at your convenience before the loan tenure ends. Applicants can pay lump sum amounts whenever they have surplus funds.
• Some loan providers may typically require a minimum repayment of 10-25% of the principal every year.
• Whenever any repayment is made, the overdraft limit gets restored by that amount for reuse. For example, if ₹10 lakhs is repaid, the limit is again refreshed to ₹10 lakhs for withdrawal.
• Interest calculation is done only on the amount utilised, not on the entire sanctioned limit.
• Interest can be serviced by setting up auto-debits for periodic transfers from a bank account to the loan account. Otherwise, manual interest payments must be made regularly.
• Before the end of loan tenure, the applicant must repay the entire loan amount, including all outstanding principal and interest. Otherwise, the loan provider may take possession of the mortgaged property.
• If the loan is closed before the full tenure, foreclosure charges may apply. Penal interest is charged for defaults or delays in repayment.
• The property documents are returned to the applicant once the overdraft loan is repaid in full.