Is there a difference between a housing loan with full overdraft facility and a flexi housing loan

In today very competitive environment, many banks have introduced in one form or another a flexi home loan where the borrower has the liberty to pay off the loan faster and yet be able to withdraw fund from the account to meet his or her emergency financial needs.

The flexi home loan look similar to the type of home loan consisting of a full overdraft facility. The one with full overdraft facility usually is offered at a higher interest rate whereas the flexi home loan is offered at a slightly lower interest rate.

While the two may look similar in purpose where they serve the need of especially those in business where they may have excess fund to settle their loan faster and yet sometime they may need to withdraw fund to meet their business needs.

The loan with full overdraft facility is provided with a cheque book where withdrawal of fund is as simple as writing a cheque, the withdrawal from flex home loan usually involve a visit to the bank.

In spite of their similarity in purpose, there is a major difference many people are not aware of. The one with overdraft facility is offered with a credit limit which the borrower can use for as long as the property is charged to the bank and as long as the overdraft account is operated within the preset limit. The flexi home loan however is offered for fixed term for a number of years depending on the age of the borrower and with a preset monthly installment. The amount owed by the borrower decrease with each preset installment paid and the borrower is only allowed to withdraw the reduced amount together with any excess payment paid earlier, so as time goes by as more and more installment have been paid, the amount which the borrower is able to withdraw decrease thus limiting its purposes as standby credit for businessmen.