Save ₹19 Lakh on a ₹60 lakh home loan With Home Loan OD Accounts: Here is How

A simple change in home loan strategy can make a big difference in long-term savings. By using a Home Loan Overdraft (OD) account, you can save over ₹19 lakh in interest and finish your ₹60 lakh loan six years ahead of schedule. For this, you don’t have to pay extra EMIs or lose access to your money.

What is a Home Loan OD Account?

A Home Loan OD, also known as a Super Saver account, links your loan to a savings or current account. Any money you park in this linked account is treated as a temporary repayment of your loan. This reduces your interest-bearing principal while keeping your funds accessible whenever needed.

For example, if you have a ₹60 lakh loan and park ₹8 lakh in the OD account, you pay interest only on ₹52 lakh. You can withdraw the ₹8 lakh anytime, but until then, it continuously lowers your interest outgo.

How Do Home Loan OD Accounts Help Borrowers?

Consider two borrowers, both with ₹60 lakh loans. One follows the standard path, while the other uses an OD account. The first borrower lets his ₹8 lakh savings sit in a regular account earning 2.5% interest and ends up paying about ₹65 lakh in loan interest over 20 years.

The second borrower parks the same ₹8 lakh in an OD-linked account. This reduces his effective loan balance daily and helps him close his loan in under 15 years. This helps him save ₹19.25 lakh in interest. His EMIs remain the same, but his money works harder by reducing the daily interest charged.

Is it worth the higher rate?

Home Loan OD accounts usually come with a slightly higher interest rate; around 0.25% to 0.5% more than a regular home loan. However, for those with stable incomes or periodic surplus cash, the long-term savings often outweigh this small premium. It rewards smart cash flow management while offering complete flexibility.

Read more: 8th Pay Commission: Will the Rising AICPI-IW Lead to a DA Hike?

Conclusion

A Home Loan OD account can be a game changer for borrowers who maintain regular savings or expect bonuses and surplus funds. By simply parking idle money in the OD account, one can cut years off loan tenure and save lakhs in interest, all without changing EMI commitments or sacrificing liquidity. For financially disciplined borrowers, it’s a simple yet powerful way to make their money work smarter.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions. 

Investments in the securities market are subject to market risks. Read all the related documents carefully before investing.