MoneyClarityTech · Home loans
The premium is charged on all of it. The saving is earned on part of it.
An overdraft-linked home loan lets you park spare cash against the loan and pay interest only on the difference. It also carries a higher rate — on your entire outstanding, whether you park anything or not. So there is a balance you have to keep sitting there permanently just to get back to level. Below is yours.
Your break-even parked balance
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That is — of your outstanding, and it has to be the average daily balance — not the amount you touch once a year. Below that line the overdraft costs you more than an ordinary loan.
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Interest over the months remaining
Same loan, same tenure, four ways of handling it. The third bar is the one no product page shows you: what the overdraft costs if you stop parking.
Overdraft, surplus parked throughout—
Overdraft, account left empty—
The premium still applies. This is the floor you fall to in a year when the money is needed elsewhere.
Term loan, same amount prepaid instead—
EMI kept, tenure shortened — the option that almost always wins on interest alone.
Park it, or prepay it
These two are not the same shape. One buys you a rebate you can withdraw; the other buys you an earlier end date and takes the money away for good.
Park the surplus
Interest over the term—
Book balance clears in—
Left over at that point—
Closing then means handing the parked money over. But every rupee of it was withdrawable on any day up to that morning — which is the one thing a prepayment can never offer.
Prepay the same amount
Interest over the term—
Loan ends in—
Left over at that pointNothing
Cheaper, usually by a wide margin. But the money is gone the day it lands, and getting it back means a fresh loan at a fresh rate.
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Drawing power
The principal still owed, falling by the scheduled amount each month exactly as it would on an ordinary loan.
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Available balance
What you parked, plus the interest you have saved so far. This is the withdrawable figure — and on an under-construction loan it also contains money not yet released to the builder.
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Book balance
Drawing power minus available balance. Shown as a negative number, and the only figure interest is actually charged on.
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Your statement on day one, with the numbers above. Most confusion about these accounts is really confusion about which of these three lines is the loan.
Three things the counter does not mention
Parked money earns no tax deduction.
Only the principal and interest genuinely paid through the EMI count for a claim. A surplus sitting in the account is not a repayment, and the interest certificate will not treat it as one.
On an under-construction property, part of the available balance is not yours.
The amount still to be released to the builder sits inside the same figure. It looks like withdrawable cash. It is not, until the last disbursement is done.
It is an overdraft account, not a savings account.
Cash withdrawals carry charges, and there is no interest-free window. Use it for transfers, and keep the household account separate.
How to read this. The arithmetic assumes monthly rests, a rate that does not change, and a surplus held steady from the first month — the real average balance is what matters, so a figure you dip into every quarter should be entered lower than the peak. The overdraft premium varies by lender and by profile and is not a fixed market number; the default here is illustrative and your sanction letter carries the real one. Interest on the parked amount is treated as a saving, not income, which is how these accounts work. This tool is education, not advice — nothing is uploaded, nothing is stored, and every figure is computed on your own phone.
