Home loan overdraft saver.
Keep your savings in the loan account, pay interest only on the rest, and see what it saves.
How a home loan overdraft works
Some lenders offer a home loan with an attached current account. Money you keep in that account reduces the balance on which interest is charged, yet you can withdraw it any time. It suits people who keep a large, steady amount of savings.
How to use it
- Enter your loan, rate and tenure.
- Enter the money you would keep in the account on average.
- Under More options, add the extra rate these loans often carry, to check it is still worth it.
Questions.
Is a home loan overdraft better than prepaying?
It saves interest like a prepayment while keeping your money available. If you will never need the money, a prepayment on a cheaper regular loan may save more.
Do these loans cost more?
Often a little. Compare the overdraft version's rate and fees with the regular loan before choosing.
Does it affect my tax deduction?
Lower interest paid can mean a smaller deduction if your yearly interest is below the limit. Ask a tax adviser for your case.
Want a lower rate?
Ask 23 banks and housing finance companies for a lower rate on the loan you already have, at their branch nearest you. Free, from your own email.