What are the interest rates and charges for an overdraft loan against Property?

Overdraft loans against property typically have lower interest rates than regular personal loans, as the risk is lower for the loan provider with property collateral.

However, interest rates vary between different banks and Non-banking Financial Companies (NBFCs). Generally, interest rates can typically range from 10% to 16% per annum for an overdraft loan against property. Nationalised banks usually have rates on the lower side, while private banks and NBFCs may have higher rates.

In addition to interest rates, loan providers charge the following fees and charges:

• Processing fee: This is usually 0.5% to 5% of the sanctioned overdraft limit. It is charged once at the time of taking the loan.
• Valuation fee: The applicant may pay the authorised property valuer's charges to assess the property's market value.
• Legal charges: Legal fees for property evaluation, drafting agreements, title searches, etc., may apply.
• Foreclosure charges: Loan providers charge some percentage of the principal outstanding if you foreclose the loan before the tenure.
• Penal interest: If interest payments are defaulted on, an additional penal rate is charged, typically 2% over the normal rate.
• Other charges: Administrative fees, document storage fees, rescheduling charges etc. may also apply.

So, while interest costs are lower, applicants should factor in the additional fees and charges involved before taking an overdraft loan against property.