ICICI Bank: Offers ‘cashback’ on Home Loan EMIs

India's largest private sector ICICI Bank had unveiled a new home loan product that will offer borrowers cashback on every EMI (equated monthly installment) for the entire tenure of the loan. The offer allows a customer to get 1% cashback on every EMI for the entire loan tenure, the ICIC bank said.

Available with immediate effect up to December 31, 2012.

The ICICI Bank said in a statement, “Subsequently, the 1% cashback will be accumulated every EMI month & get credited into the customer’s account after every 12th EMI month”.

However, the cash back that starts accruing from the first EMI will not be credited every month into the customer's account. But is given after completion of 3 years, after which it is given after every 12th EMI month.

If the customer does not want the cash back to be credited into his account, he / she can avail it in the form a principal pay-down.

Renewable Fixed Interest Rate..!

ICICI Bank customers will also get an option of a renewable fixed interest rate for the entire period up to 20 years. . The bank will offer customers the option to renew their fixed rate loans for a two (2) -, three (3) - or five (5) -year tenure at a zero conversion fee, within 30 days of completion of the initial fixed rate tenure.

The renewal can be done multiple times till completion of the tenure. If the customer does not renew the fixed rate loan, then it will move to a floating rate loan by default.

The ICICI Bank said. “The floating rate will be decided on the prevailing ICICI Bank base rate at that point of time, plus the margin decided at the time of sanction of the loan,”

The fixed rate of interest for housing loans up to Rs. 30 lakh ranges between 10.25% and 10.75%. For home loans above Rs. 30 lakh, the fixed rate is between 10.50% and 11%, depending on the maturity period.

“After completion of the initial fixed rate tenure, if a customer / home loan buyer decides to renew his fixed rate housing loan, the renewable fixed rate will be decided on the prevailing ICICI Bank base rate at that point of time, plus the margin decided at the time of sanction of the loan,” the ICICI bank said.

EMIs for the new housing loan product can only be paid through an auto debit to an ICICI Bank account.

A spokesperson of ICICI Bank said, “We want to build long lasting relationships with customers and this product is a step in that direction. It is in line with our recent `My Savings Reward Programme', which rewards customers for transactions done on savings account.“

According to mumbai based financial planners, the product is a marketing gimmick to attract customers. The cashback benefit translates into a interest rate reduction of  0.15%. A home loan seeker should instead choose a bank offering lower interest rate on housing loans.

As on September, 2012, ICICI Bank's housing loans constituted 65.8% of the total retail book of Rs. 93,300 crore.

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