My sister is a branch manager in a leading government bank. She once told me that people frequently ask her will overdraft account affect home loan or not. I had no idea regarding this as well, so she explained how overdraft affects our home loan. Simply having an overdraft won't usually have an impact on our home loan, but how we utilise it most definitely will.
Get home loans starting at 7.3% interest rates on NoBroker, here.Most bank accounts include overdraft capabilities, though many people hardly ever utilise them. However, if you're on a tight budget, using an overdraft can be a cost-effective method to stay on top of your finances. But if you frequently use your overdraft, it could be challenging to secure a home loan.
Will overdraft account affect home loan in SBI?
If you've never or very seldom utilised the overdraft facility, applying for a home loan with it can be relatively straightforward. But when you frequently use or have recently used your overdraft, problems usually start to occur.
How dependent you are on your overdraft will be evaluated by home loan lenders when they review your application for a home loan. Lenders may turn you down if you frequently utilise overdraft capabilities and have a lot of open overdrafts with different banks. Lenders will examine your degree of affordability in addition to the other components of a mortgage application, such as credit checks and income assessments. This is necessary so that potential lenders can evaluate your capacity to pay back the mortgage you've applied for.
Does an overdraft affect getting a home loan?
Your capacity to pay back the loan may be impacted by the monthly fees, like interest rates, that come with using an overdraft. You could therefore not receive the whole amount you requested for the home loan.
If you frequently utilise your overdraft capacity, it may indicate that your financial situation is precarious. This is frequently the reason why lenders are hesitant to grant a home loan to individuals who frequently use their overdrafts.
But a home loan can still be obtained even if you have a sizable agreed overdraft. For this, the lenders will, nevertheless, consider your overdraft cap. This is due to the possibility of financial risk posed by your capacity to borrow a sizable sum through your overdraft and whether or not you will be unable to pay it back on schedule. Your home loan payments may therefore be impacted by this.
Should you clear your overdraft before you apply for a home loan?
It may not be necessary, but paying off an overdraft before applying for a home loan can be helpful. Depending on the amount and associated fees, having an overdraft might occasionally cause problems. Your ability to avoid these circumstances depends on whether you have no overdraft or have paid it off.
Lenders typically evaluate your overdraft in two different ways-by considering your overdraft limit and how frequently you use the overdraft facility. Both may have specific effects on your assessment.
So, if you are still wondering will overdraft account affect home loan, let me tell you that while you have an overdraft, you can still apply for a home loan, but not all lenders will provide a home loan to you.
Read More: What is Home Loan Overdraft Facility in SBI? How to Close an Overdraft Account in SBI? How to Withdraw Money from SBI Overdraft Account?Shifting, House?
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Will Overdraft Account Affect Home Loan?
Isha
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2022-12-21T21:19:56+00:00 2023-09-21T15:46:03+00:00Comment
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