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ICICI Bank, one of the leading home loan providers, has come out with a unique product for home loans. Under this scheme, the customer will be given a 1% cashback on every equated monthly instalment (EMI) she pays for the entire tenor of the home loan. The offer is available for both floating and renewable fixed home rates.

Timeline for cashback:
The cashback will start accruing from the first EMI month and will get credited into the customer’s account after the completion of the 36th EMI month. Subsequently, the 1% cashback will get accumulated every EMI month and will get credited into the customer’s account after every 12th EMI month. Customers can choose to avail the cashback either in the form of credit to their ICICI Bank account or in the form of adjustment against principal outstanding.

Procedural formalities: 
The customer will have to open a savings account with ICICI Bank and activate the auto debit facility for your home loan to the account to avail this offer. Once EMI starts getting deducted from customers ICICI account, every EMI will be taken into account for the cashback offer. For instance, if one takes a Rs.25 lakh loan for 20 years, the total cost of loan will be Rs.59,02,580 (loan cost of Rs.58,90,080 plus processing fee of 0.50% of the loan amount). Through the cashback of 1% for the entire loan amount, one will save Rs.58,900. Now if one takes the option of adjustment against principal outstanding, your tenor will go down by six to seven months.

Catch:
If you miss paying an EMI during the first 36 months, you will be eligible for the cashback benefit for that particular period if you pay the overdue EMIs before the 36th month. For instance, if you miss the EMI in the 30th month and pay EMIs for the 30th and 31st months together in the 31st month, at the end of 36 months, you will get cash back. However, if you miss paying the EMIs in the last three months—34th, 35th and 36th months—you will not be eligible for the cashback offer for the entire period of 36 months even if you pay all the dues after say the 38th month. Similarly, during the 12-month cycles after the 36-month cycle ends, if you miss an EMI, you will not get the cashback offer for the preceding months, if you are unable to pay it before the stipulated period of 12 months. For instance, if you miss paying the EMI in the 11th and 12th month in a 12-month cycle, you will not get the cashback benefit for the preceding 10 months. The cashback computation will start after you pay all the dues.

Most banks offer almost same interest rate on home loans. However, through this product from ICICI, one can reduce the tenure of the home loans by few months. One needs to ensure that one is discipline in paying EMIs though.


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