Union Bank Overdraft loan

Union Bank of India is one of the leading public sector banks in India, offering a range of banking products and services to its customers. One of the products that Union Bank offers is the overdraft loan, which is a type of credit facility that allows the borrower to withdraw money from their account even if the balance is zero or below the agreed limit. This can be useful for meeting personal or business needs, or for repaying high-cost loans. 

Here, we will explain the features, benefits, eligibility, fees, charges, documents, and process of availing of the Union Bank Overdraft Loan.

What is Union Bank Overdraft Loan?

A Union Bank Overdraft Loan is a credit facility that is linked to the borrower’s existing or new home loan account. The borrower can use the overdraft loan for any purpose, as long as they have sufficient equity in their home loan property. The overdraft loan is secured by the extension of the mortgage on the residential property obtained for the home loan.

Union Bank offers two types of overdraft loans: Union Ashiyana Overdraft Scheme and the Salary Plus Overdraft Facility.

Union Ashiyana Overdraft Scheme

The Union Ashiyana Overdraft Scheme is an overdraft loan facility for existing or new home loan borrowers of Union Bank. The features of this scheme are as follows:

• The maximum amount of overdraft loan is Rs. 20 lakhs, or 50% of the home loan amount, whichever is lower.
• The interest rate is the same as the home loan interest rate, plus a margin of 0.50%.
• The repayment period is co-terminus with the home loan period, or up to the retirement age for salaried individuals and 65 years for non-salaried individuals, whichever is earlier.
• The borrower has to reduce the overdraft limit by 20% every year during the last five years of the repayment period, or the due date of the home loan, whichever is earlier.
• There is no prepayment penalty for the overdraft loan.

Salary Plus Overdraft Facility

Salary Plus Overdraft Facility is an overdraft loan facility for salaried individuals who have their salary account with Union Bank. The features of this facility are as follows:

• The maximum amount of overdraft loan is Rs. 5 lakhs, or 10 times the net monthly salary, whichever is lower.
• The interest rate is the base rate plus a margin of 3.50%.
• The repayment period is up to 60 months, or up to the retirement age, whichever is earlier.
• The borrower has to repay the overdraft loan in monthly instalments, or by crediting the salary in the overdraft account every month.
• There is no prepayment penalty for the overdraft loan.

What are the benefits of Union Bank Overdraft Loan?

Union Bank Overdraft Loan offers the following benefits to the borrowers:

• It provides instant liquidity and flexibility to the borrowers, as they can access funds anytime and for any purpose, without any restriction or documentation.
• It helps the borrowers save on interest costs, as they only pay interest on the amount utilised and not on the entire limit.
• It allows the borrowers to repay the overdraft loan at their convenience, as they can adjust the repayment amount and frequency according to their cash flow and income.
• It enhances the creditworthiness of the borrowers, as they can maintain a good credit history and score by timely servicing the interest and principal of the overdraft loan.

Who is eligible for Union Bank Overdraft Loan?

The eligibility criteria for the Union Bank Overdraft Loan are as follows:

• The applicant should be an existing or new home loan borrower of Union Bank, or a salaried individual who has their salary account with Union Bank.
• The minimum age of the applicant should be 18 years, and the maximum age should be the retirement age for salaried individuals and 65 years for non-salaried individuals.
• The applicant should have a satisfactory repayment track record for the home loan or the salary account, as the case may be.
• The applicant should have sufficient equity in the home loan property, or a stable and regular income, as the case may be.

What are the fees and charges for Union Bank Overdraft Loan?

The fees and charges for the Union Bank Overdraft Loan are as follows:

• Processing fee: 0.50% of the overdraft loan amount, subject to a minimum of Rs. 500 and a maximum of Rs. 10,000.
• Documentation charges: As per the actual cost incurred by the bank.
• Stamp duty: As per the applicable state laws.
• Annual maintenance charges: Nil.

What are the documents required for Union Bank Overdraft Loan?

The documents required for the Union Bank Overdraft Loan are as follows:

• Application form must be duly filled out and signed by the applicant and the co-applicant, if any.
• Identity proof, such as PAN card, Aadhaar card, passport, voter ID card, etc.
• Address proof, such as electricity bill, telephone bill, bank statement, etc.
• Income proof, such as salary slip, income tax return, bank statement, etc. for salaried individuals, and business proof, such as GST registration, balance sheet, profit and loss account, etc. for non-salaried individuals.
• Property documents, such as title deeds, sale agreements, valuation reports, etc., for home loan borrowers.
• Any other document as required by the bank.

What is the process to avail Union Bank Overdraft Loan?

The process to avail a Union Bank overdraft loan is as follows:

• The applicant has to visit the nearest branch of Union Bank and submit the application form along with the required documents and the processing fee.
• The bank will verify the documents and conduct a credit appraisal of the applicant and the property, as the case may be.
• The bank will sanction the overdraft loan and communicate the same to the applicant, along with the terms and conditions of the facility.
• The applicant has to accept the sanction letter and execute the necessary documents, such as the loan agreement, the mortgage deed, the guarantee deed, etc.
• The bank will disburse the overdraft loan and create the overdraft limit in the applicant’s account, which can be accessed by the applicant through cheque, ATM, internet banking, mobile banking, etc.

Conclusion

Union Bank Overdraft Loan is a convenient and flexible credit facility that can help borrowers meet their personal or business needs or repay their high-cost loans. It offers attractive interest rates, easy repayment options, and no prepayment penalty. However, the borrowers should be careful about the utilisation and repayment of the overdraft loan, as it can affect their credit score and financial health. Therefore, the borrowers should compare the features, benefits, eligibility, fees, charges, documents, and process of Union Bank Overdraft Loan with other similar products on the market and choose the one that suits their needs and preferences