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ICICI Bank Cashback Home Loan – Should you opt?

cashback home loan

In order to woo customers in the festival season, ICICI bank has recently launched Cashback Home loan. This new cashback home loan offers a benefit of 1% cashback on every EMI paid by the borrower. The cashback Home loan is available for domestic resident and NRI customers. If you are planning to take home loan it is worth to explore cashback home loan offered by ICICI Bank. Here are unique features and benefits offered by Cashback Home Loan.

ICICI Bank Cashback Home Loan – Key Features 

  • Loan Amount – Any Approved Loan amount
  • Loan tenure – 15 Years to 30 Years
  • Eligibility – Both domestic and NRI customers are eligible for this loan. This loan offer is also available for transfer of existing home loan
  • Cashback Mode – Customer can either opt for cash back as direct credit in bank account or even opt for adjusting the cashback against principal outstanding of their home loan
  • Cashback accumulation method – The cashback accumulation will start from the first EMI itself. However, it will first get credited to the customer account after completion of 3 years (36 months). After 3 years every 12th EMI payment cashback will get credited to the customer based on selected option.
  • Other Loans – The offer of cashback is also available for a loan against property, lease-rental discounting and top-ups on existing mortgage loans.
  • Interest rate – The interest rates for ICICI Bank home loans is 8.4% as on Sept 2017

Also Read – 20 Types of Loans in India

ICICI Bank Cashback Home Loan Calculation

Let’s try to calculate actual benefit offered by ICICI bank cashback home loan by taking one hypothetical example. Suppose you opt for cash back home loan with ICICI bank. The loan amount is 10 Lakh and a period is 20 years. EMI, in this case, would be Rs.8615. Cashback amount under this case would be Rs.86 per EMI.

Cashback Credit in Your Account –

If you opt for cash back credit option in above loan, at the end of loan period your account will get credited total Rs.20676. This is considering fact that you will not do any prepayment. This amount will vary based on the amount of loan EMI and other factors.

Cashback for Prepayment of Loan –

Suppose you opt for repaying principal using this cashback option. In this case you will be able to close your loan 5 months early. Thus, you will be able to save virtually Rs.43075 in above case. The amount and loan closer period given here is for example purpose. The actual amount will vary based on the number of factors.

For more information refer to sample calculation excel sheet given here.

Should you Opt for ICICI Bank Cashback Home Loan?

Overall ICICI Bank Cashback Home loan is a good product that gives additional benefit of 1% cash back to the customer. However, the cashback benefit will be actually passed on to the customer after 3 years. This may be due to the fact that in the initial year’s interest component on the home loan is high. If cashback is used for repayment at the earlier stage it will bring down principal.

From above example, we can clearly see that small cashback repayment makes a good difference in home loan tenure and EMI payment. You can opt ICICI Bank Cashback Home loan with cash back option to prepay the home loan.

Shitanshu Kapadia
Shitanshu Kapadia
Hi, I am Shitanshu founder of moneyexcel.com. I am engaged in blogging & Digital Marketing for 10 years. The purpose of this blog is to share my experience, knowledge and help people in managing money. Please note that the views expressed on this Blog are clarifications meant for reference and guidance of the readers to explore further on the topics. These should not be construed as investment , tax, financial advice or legal opinion. Please consult a qualified financial planner and do your own due diligence before making any investment decision.