Overdraft Against Property : Flexible OD Facility for Businesses
Running a business often requires instant access to funds — whether it’s for managing daily operations, fulfilling new orders, or stabilizing cash flow during slow months. Overdraft Against Property gives you a revolving credit limit by using your residential or commercial property as security. You can withdraw funds anytime you need and pay interest only on the amount utilized, not on the full limit.
With a lower interest rate compared to unsecured overdrafts and business loans, this facility is ideal for SMEs, traders, manufacturers, and service-based businesses that need ongoing working capital support.
What Is Overdraft Against Property?
Overdraft Against Property (OD Against Property) is a credit facility where the bank gives you a fixed credit limit by keeping your property as collateral. You can withdraw any amount from this limit whenever your business needs funds — just like using a wallet that refills again after repayment.
You don’t have to pay interest on the entire limit.
Interest is charged only on the amount you actually withdraw.
Think of it as a flexible “use-only-when-needed” loan that helps you manage working capital without taking a long-term EMI burden. It’s ideal for businesses that have regular inflow and outflow of money.
How Does Overdraft Against Property Work? (Step-by-Step)
Step 1: Bank Evaluates Your Property Value : The bank checks the current market value of your residential, commercial, or industrial property. Based on this, your OD limit is decided (usually 50% to 70% LTV depending on lender policies).
Step 2: Bank Approves a Credit Limit : Once the property is verified, the bank gives you a fixed overdraft limit — for example ₹20 lakh or ₹50 lakh. This amount is not given to you at once; it stays as available credit in your OD account.
Step 3: Withdraw Money Anytime as Needed : You can withdraw any amount within your limit at any time — ₹10,000, ₹5 lakh, or even multiple small withdrawals. There is no compulsion to use the full limit.
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Step 4: Interest Applies Only on the Utilized Amount : If your limit is ₹30 lakh and you use only ₹5 lakh, Interest will be charged only on ₹5 lakh, not on the full ₹30 lakh. This makes OD much cheaper than a regular LAP.
Step 5: Repay Whenever You Want : There is no fixed EMI. You can repay the utilized amount fully or partially anytime. Once you repay, your limit becomes free again, and you can reuse it.
Step 6: Use–Repay–Reuse (Cycle Continues for the Entire Tenure) : The OD account works like a revolving facility for 1–15 years depending on the bank. You can keep using it daily, monthly, or occasionally — completely flexible.
Key Features of Overdraft Against Property
Flexible Withdrawals Anytime : Withdraw any amount within your approved OD limit whenever your business needs funds.
Interest Only on the Amount You Use : No interest on the full limit.
If you use ₹3 lakh out of ₹25 lakh, you pay interest only on ₹3 lakh — nothing else.
No Fixed EMI Pressure : Unlike a regular LAP, there is no compulsory EMI.
You can repay the utilized amount anytime.
Revolving Credit Facility : Once you repay, your available limit is restored.
Use–repay–reuse unlimited times throughout the tenure.
Long Tenure (1 to 15 Years) : Depending on the lender, OD limits can remain active for many years, making it ideal for long-term cash flow stability.
Ideal for Business Cash Flow : Perfect for handling: Monthly working capital gaps, vendor payments, season-based demand & sudden expenses
Secured Against Your Property : Because it’s a secured facility, you get: Lower interest rates, higher limits & faster approval compared to unsecured OD
Eligibility Criteria for Overdraft Against Property
You can qualify for an OD facility against property if you meet the basic requirements mentioned below:
Age Requirement : Minimum: 23–25 years & maximum at loan maturity: 65–70 years (varies by lender)
Eligible Applicant Types : Self-employed individuals, business owners (proprietorship, partnership, LLP, Pvt. Ltd.), professionals (CA, doctor, architect, etc.), and salaried individuals with high, stable income.
Property Type Accepted : Residential property & commercial property (Both self-occupied or rented-out are usually acceptable.)
Income Stability : Credit Score : A minimum CIBIL score of 700+ is ideal for smooth approval. Minimum business vintage: 2–3 years, consistent cash flow & strong bank statements
Credit Score : A minimum CIBIL score of 700+ is ideal for smooth approval.
Clean Financial Track Record : No major loan defaults & no ongoing critical disputes on the property
FOIR (Fixed Obligation to Income Ratio) : Your existing EMIs vs income must be within lender limits (usually 50–65%).
Documents Required for Overdraft Against Property
You need a few basic documents to get an Overdraft Against Property. Most lenders ask for the following:
Identity Proof (Any One) : Aadhaar Card, PAN Card, Passport, or Driving License.
Address Proof : Aadhaar, utility bill (electricity/water), registered rent agreement, or passport.
Income Proof : ITR for the last 2–3 years, Profit & loss statement, balance sheet, GST returns, and bank statements (latest 6–12 months).
For Salaried : Salary slips (last 3–6 months), bank statements of salary account, and Form 16 or ITR.
Property Documents : Title deed, registered sale agreement, property tax receipt, approved building plan, and previous loan statements (if property is mortgaged).
Business Proof (if applicable) : Business registration certificate, GST certificate, and partnership deed/MOA/AOA.
Benefits of Choosing an Overdraft Against Property
Overdraft Against Property comes with several strong benefits that make it one of the most flexible funding options for business owners and professionals:
Pay Interest Only on What You Use : You don’t pay interest on the full limit.
You pay interest only on the amount you actually withdraw, which helps you save a lot of money.
Reusable Credit Limit : You can use, repay, and use again anytime during the overdraft period.
It works like a wallet you can refill whenever needed.
Ideal for Managing Cash Flow : Perfect for businesses facing slow customer payments, seasonal demand, sudden expenses, or working capital gaps — ensuring operations never stop due to lack of funds.
Lower Interest Rates Compared to Unsecured Loans : Because your property is taken as security, lenders offer lower interest rates than personal loans or business loans.
No Fixed EMI Burden : There is no fixed EMI.
You repay when cash is available, giving you complete financial freedom.
Higher Loan Amount : Since the loan is secured, lenders offer a higher limit based on your property value — usually up to 65–75% LTV.
Funds Available Anytime You Need : You can access funds anytime through cheque, net banking, or your overdraft account — available 24×7.
Interest Rates & Charges for Overdraft Against Property
Understanding charges before applying helps you plan better and avoid surprises.
Interest Rates : Interest typically ranges from 9% to 12% per annum, depending on property type, borrower’s credit score, loan amount, and tenure.
Processing Fee : Usually 0.5%–1% of the OD limit, covering administrative costs for evaluating the application.
Legal & Technical Fees : Includes property valuation, title verification, and documentation charges.
Prepayment / Foreclosure Charges : Usually nil or minimal for OD facilities, but it’s best to confirm with your lender before transferring or closing the facility.
Stamp Duty & Registration Charges : Applicable if any new legal documents or mortgage registration is required.
Example: How Overdraft Against Property Works
Understanding OD against property is easier with a simple example:
OD against property is simple: On a ₹50 lakh property, a 60% OD limit gives ₹30 lakh; if you use ₹10 lakh at 10% interest, you pay interest only on that amount.
Calculation : Interest applies only on the ₹10 lakh used, and if you repay ₹5 lakh, your available limit becomes ₹25 lakh and can be reused anytime.
Key Takeaways : You control cash flow, avoid paying interest on unused funds, and benefit from flexible withdrawals and repayments.
Who Should Apply for Overdraft Against Property?
Overdraft Against Property is ideal for business owners, professionals, and SMEs who need flexible access to funds. You should consider applying if you fit any of the following categories:
Small & Medium Enterprises (SMEs) : Ideal for SMEs to manage working capital gaps, pay suppliers on time, and keep daily operations smooth.
Traders & Manufacturers : Helps traders and manufacturers handle sudden raw material needs, cover operational delays, and manage seasonal demand.
Professionals (Doctors, CAs, Architects, Lawyers) : Useful for professionals to cover business expenses, expand operations, and invest in equipment or office upgrades.
Business Owners Facing Cash Flow Issues : Supports business owners in improving liquidity without a new loan and lowering interest costs compared to unsecured credit.
Existing LAP Holders : Great for LAP customers seeking more flexibility or wanting to convert part of their LAP into an overdraft facility.
loanagainstpropertyinindia.co.in guides you to check eligibility and ensures a smooth application process for OD against property.
Final Thoughts On Overdraft Against Property
Overdraft Against Property is a highly flexible financial solution for businesses and professionals who need instant access to funds without the burden of fixed EMIs. By using your property as security, you can get a credit limit that can be used, repaid, and reused according to your business needs.
This facility is perfect for managing working capital, paying vendors, covering seasonal demand, or handling unexpected expenses. With lower interest rates, flexible repayment, and revolving credit, it is smarter than taking multiple short-term loans.
FAQs About Overdraft Against Property
What is Overdraft Against Property?
How is it different from a regular Loan Against Property (LAP)?
Who can apply for OD Against Property?
What is the maximum limit available?
What documents are required?
Can I prepay or repay partially?
Are there any processing or legal fees?
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This website functions as a loan against property–focused advisory channel supporting individuals and businesses seeking structured funding solutions. Advisory, documentation, and lender coordination services are provided by NKB Kredit Solutions Pvt. Ltd., a registered Indian company offering business finance advisory services.