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Home Loan Against Fixed Deposit (FD)

Fixed deposits are a reliable way to invest your capital and securely grow your wealth. With an attractive interest rate, you can easily earn generous returns. Additionally, they can be a great way to finance emergencies or other goals without going into huge debt. 

One option is by availing a loan against FD. You can get a loan for various reasons, including buying a home. Read on to learn more about availing a home loan against an FD.

A Loan Against An FD to Buy a Home

If you break your FD to acquire the funds to buy a home, you will end up losing the interest earnings. This can negatively affect your financial standing and well-being. Moreover, you have to pay charges on premature withdrawal. 


As such, taking a home loan against the FD is a smart way to raise funds to purchase a new home. Typically, FD issuers offer you loans for up to 75% value of your FD. The loan amount you can avail against your FD depends on whether it is a cumulative FD or a non-cumulative FD and varies for every issuer. 


When you take a home loan against FD, you are availing of a secured loan. Here, you are using your FD as collateral and do not have to take on a debt that can tank your current and future financial health. 


An important thing to keep in mind about availing a home loan against FD is that you may not be able to avail of the loan immediately. You can confirm the terms for this with your FD issuer.


home loan fd

Home Loan Against An FD: Features

Nominal interest rate

Generally, when you take a  home loan, the interest rate charges are higher, which increases your cost. However, when you take a  loan against FD, your lender/issuer will charge 2% more interest than that of your FD. As a result, your cost of borrowing reduces, and you may be able to enjoy more savings. 

Simple application

As you are already a fixed deposit account holder, you have a relationship with your lender/issuer. This becomes beneficial because the lender already has certain personal and credit profile information. This reduces your application and processing time of your home loan against FD, giving you access to funds easily.

Nil fees and charges

With a regular home loan, you may be charged a hefty processing fee, foreclosure charges, or prepayment fees. On the other hand, with a home loan against FD, these are waived off. This allows you to become debt-free at your convenience and reduce your borrowing costs.

Continual returns

This is among the best features of a home loan against FD. A housing loan against FD eliminates the need to prematurely withdraw your FD and allows you to earn continued returns. As such, you don’t lose any earnings and can keep growing your wealth securely.

Credit score

Generally, you need to have an excellent credit score to avail of secured or unsecured loans. However, in case of availing a home loan against FD, you can do so without an excellent credit score. Many issuers/lenders offer loans with easy credit score requirements because the FD acts as a security.

Final Thoughts on Home Loan against FD

Availing a home loan against FD is a good way to save money as your interest on the loan is significantly reduced. You don’t have to avail an unsecured loan, which is not only costlier but may also be time-consuming. Moreover, a home loan against FD can be quick to get, depending on your issuer.


With digital solutions, you may be able to get the funds in a matter of hours and without having to visit a physical branch. Lastly, choosing to avail a home loan against an FD is smart because your investment remains undisturbed.


Since you don’t have to prematurely withdraw the corpus to get funds, it continues to accrue interest while you repay your dues. This way, you can still work toward your wealth generation goals, while tending to other objectives, as they crop up.


The information provided by BFDL herein above is related to the Non-Partnered Banks/ NBFCs and is just for the purpose of information and under no circumstances the information provided hereinabove is intended to be source of advice or recommending any financial investment advice or endorsement of any sort. 

The information including interest rates with regard to fixed deposit, provided on this website is gathered through publicly available sources over the internet and is considered as accurate and reliable to the best of our knowledge. BFDL disclaims any responsibility or liability regarding inaccuracies, omissions, mistakes etc. as well as offers by the Non-Partnered Banks. The use of information set out is entirely at the User’s own risk and User should exercise due care prior taking of any decision, on the basis of information mentioned hereinabove. You are advised to visit/ contact the respective Banks/ NBFCs to verify the information before making any investment or opening an account. Further, BFDL does not undertake any responsibility or liability to update this information. YOU ARE SOLELY RESPONSIBLE FOR ANY LIABILITY OR DAMAGE YOU INCUR THROUGH ACCESS TO OR USE OF THE SITE OR SUCH INFORMATION OR MATERIALS EXCEPT WHERE THE LAWS AND REGULATIONS OF A PARTICULAR JURISDICTION CONCERNING WARRANTIES CANNOT BE WAIVED. Additionally, display of any trademarks, tradenames, logo and other subject matters of intellectual property owners. Display of such Intellectual Property along with the related product information does not imply BFDL’s partnership with the owner of the Intellectual Property of such products. 

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These are some key advantages of a loan against FD:

  • No foreclosure charges

  • Less interest to pay on the loan

  • No repayment/processing fees

  • Continued returns

You can apply for a loan against an FD by contacting the issuer and filling out the required documents.

Generally, the loan amount you get is a set percentage of your investment’s total value. This percentage is set by the issuer and varies from one issuer to another. You can get up to 95% of the FD value as a loan, and use it to fund your objective.

No, your investment remains unaffected and continues to accrue interest in the background. Do note that it is your responsibility to borrow funds wisely, and only if you can handle repayment on time.

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