Icici Bank Home Loan

There are two types of tax benefits associated with home loan for Resident Indians:

Repayment of the Principal Amount: One can get a Tax rebate under section 80C of the Income Tax Act on whole amount repaid by him in a financial year, maximum upto Rs. 1,50,000/- each financial year (Increased from 1 Lakh to Rs. 1.5 Lakh in Budget 2014).

Repayment of the Interest on Home Loan: Tax Benefit on Home Loan for payment of Interest is allowed as a deduction under Section 24(1) of the Income Tax Act. One is eligible for a Tax Rebate of maximum of Rs. 2 lakh per financial year for home loan interest paid by him/her during that financial year.

After April 1, 2016, all bank loans (including home loans) are linked to the bank's MCLR with or without a mark-up or spread (bank margin). Earlier, they were linked to the bank's base rate. All banks are required to disclose their MCLR each month.

Banks generally hike MCLR, whenever there is a hike in Repo Rate by the RBI. Banks may increase MCLR due to surging bond yields and higher provisioning requirements, even when the RBI has not hiked Repo Rate.

Home Loan Interest Rate can be equal to the MCLR or have a 'margin' or 'mark-up' or 'spread' but can never be lower than MCLR.

"Home Loan Interest Rate is linked to the bank's MCLR. If MCLR goes up, the home loan rates will also go up. Home Loan Interest Rate will not be impacted by hike in MCLR only if banks reduce the mark-up (margin) in the home loan. If MCLR goes down, the home loan rates will also go down."

For MCLR-linked home loans, the rate is reset after 6 or 12 months according to the agreement between the borrower and the bank. The interest rate applicable on the reset date will become the new rate on which the future EMI's will be calculated.

Home Loan Interest Rate of old home loan borrowers (who had taken home loans before April 1, 2016) are linked to the base rates of the banks. Hence the EMI which they are paying is also linked to base rate. Banks have always remained very sluggish for passing on the benefits of RBI rate cuts to the borrowers.

Now after April 1, 2016, Home Loan Interest Rate is linked to MCLR (Marginal Cost of funds based Lending Rate) for home loan borrowers in order to resolve the problems of the Base Rate regime.

It will be beneficial for them to switch to MCLR linked rate if the difference between what they are paying (under base rate) and what the bank is offering (under MCLR) is significant. So they must switch to MCLR linked rates, if outstanding loan is high and the remaining tenure is also long.

In that situation, Base Rate Borrowers have following two options:

(1) Switch to MCLR linked home loan with the same bank: It is beneficial, in case the bank is charging a nominal switching fee such as 0.50% or less on outstanding amount.

(2) Transfer the loan to another bank on MCLR: It is feasible, if new bank has waived off processing fee (which they generally do in order to attract the customer and increase their business) or is charging very less processing fee and legal and transfer costs.

The borrower must compare both the above-mentioned options and opt for the one which is more beneficial to them in terms of money saved. It will result not only in reduction of future EMIs but also a huge amount of interest will be saved during remaining tenure.

One may as well continue the loan on base-rate especially if the maturity is near and need not go through the process of conversion.

Further, the Reserve Bank (RBI) is going to link the base rate for loans given by banks to the MCLR from April 1, 2018. Once it happens, the base rate will automatically increase or decrease along with the MCLR without any specific action required for adjustment. This will be very beneficial for the home loan borrowers whose rates (EMIs) are still linked to the base rate.

ICICI Bank offers convenient repayment options to its customers. Following repayment options are being offered currently:

For a fully disbursed loan

• EMI: An EMI refers to an equated monthly instalment. It is a fixed amount which you pay every month towards your loan. It comprises of both, principal repayment and interest payment.
• Flexible Loan Instalment Plan (FLIP): FLIP is a repayment facility, given when incomes are going to reduce after a certain time period during the loan tenure due to one of the borrowers retiring before the loan maturity.

For a partly disbursed loan

• Pre-EMI: Where you have availed only a part of the loan, you would be required to pay us only the interest on the amount disbursed till the full loan is availed. This interest is called pre-EMI interest (PEMI) and is payable monthly till the final disbursement is made, after which the EMIs would commence.
• EMI Under Construction: EMI Under Construction is offered for structuring a home loan to enable individuals to commence their EMI in a partly disbursed under construction project. Commencement of EMI ensures re-payment towards principal amount leading to savings in interest and faster repayment of the loan. EMI under construction can be paid either on part disbursed amount or on sanctioned loan amount.

You can repay ICICI Bank home loan in any of the following methods:

(1) Electronic Clearing Service (ECS): Electronic Clearing System is preferred for faster payments and collections. If you have an account with other bank than ICICI Bank then you can use ECS for loan repayment. You will have to fill up a form and submit the same with your bank for debiting EMI every month from your account. In this case, your EMI will be automatically debited every month from your bank account and credited to ICICI Bank towards loan repayment instalment.

(2) Standing Instruction (SI): If you maintain your account with ICICI Bank, then you can use this method. Under this method, you will have to issue a Standing Instruction to ICICI Bank to debit your EMI amount on a due date every month from your ICICI Bank account and credit to ICICI Bank loan account towards loan repayment instalment. You save a lot of time and energy by giving standing instructions to the bank to carry out the transaction on your behalf each time.

(3) Post-Dated Cheques (PDCs): In this method, you need to submit post-dated EMI cheques to ICICI Bank for a certain period of time, which are deposited by the ICICI Bank on the due date. This alternative is cumbersome and time-consuming and involve a manual procedure of visiting the ICICI Bank in a timely manner.

Points to Note Regarding EMI Payment Methods

1. A fresh set of PDCs need to be submitted in a timely manner.
2. Post Dated Cheques are accepted only for non-ECS locations.
3. It is good to pay your EMIs either through the Standing Instruction or ECS for faster and timely remittance of your loan instalments.

One can pre-pay ICICI Bank Home Loan without any prepayment charges as it allows prepayment at nil charges in case of floating rate home loans. If the borrower makes a prepayment, the outstanding balance of principal amount of his home loan reduces. Then in that case he has following 2 options:

1. He can continue with the existing and reduce the loan tenure
2. He can reduce the EMI and keep the loan tenure the same

Out of above 2 options, first option is more beneficial for the borrower as he pay less interest to the bank as the pay off home loan will be faster.

• Negotiate with your banker on lower interest rate
• Apply for longer tenure
• Give maximum amount as down payment
• Pre-pay loan amount
• Switch to another bank/ FI offering lower interest rate

• January 29, 2020: ICICI Bank has introduced new self-service facility called "iBox" to get debit card, credit card or cheque book anytime, any day in 17 cities
• January 27, 2020: ICICI bank posted 158.32% year-on-year (YoY) rise in standalone profit at Rs 4,146 crore for the quarter ended December 31, 2019
• January 7, 2020: ICICI bank has reduced its MCLR for the month of January by 5 bps across all tenors
• December 2, 2019: ICICI Bank cuts one-year marginal cost of funds-based lending rate (MCLR) by 10 bps to 8.25%
• April 2, 2019: ICICI Bank has cut its MCLR by 5 bps across tenors from its previous benchmark rates
• June 01, 2018: ICICI Bank has raised lending rates by 10 basis points across all maturities ahead of the Reserve Bank of India raised policy rates by 25 basis points
• April 24, 2018: ICICI Bank makes a u-turn, drops plans to sell housing-finance unit
• October 01, 2017: ICICI Bank Is Following Axis Bank To Offer Cashback On Home Loans
• September 28, 2017: ICICI Bank launches 'cashback' home loans

1. Can I give standing instructions to repay my Home Loan EMIs directly from my ICICI Bank Savings Account?

   Yes, you can opt for Automated Repayment and your EMIs will be directly repaid from your ICICI Bank Savings Account, thus saving you the trouble of procuring, signing and tracking post-dated cheques.

2. What is Pre-EMI Option?

   Pre-EMI is an option in which the borrower has to pay only interest on loan amount during the progress on the construction of the project. The actual EMI payment will be started only after his/ her possessing the house.

3. What are the various interest rates offered on home loans?

   Interest rates offered vary for women borrowers and others. Women borrowers are offered home loan at lower interest rate in ICICI Bank.

4. What is the eligibility criteria for getting ICICI Bank home loan?

   The eligibility criteria for ICICI Bank Home Loan is as follows:

   Basis	Salaried Customers	Non Salaried Customers
   Age	Minimum 21 years & Maximum 60 Years	Minimum 21 years & Maximum 65 Years
   Income	Applicant should have regular income	Applicant should have regular income
   Job/ Business Experience	1 Year	2 Years
   Age of Co-applicant	Minimum 18 years	Minimum 18 years

5. Will my OD limit reduce if I make a part payment into my home loan account?

   No, the OD limit will remain the same until closure of the home loan account, irrespective of the part-payments made into the home loan account.

6. Can joint-applications be made for ICICI Bank Home Loans?

   Yes. Joint applicants can be made for ICICI Bank Home Loans.

7. Is there any fee for renewal of Home OD Limit?

   Yes, the overdraft offered with this product is renewable annually, and will attract applicable renewal charges, which will be debited to the overdraft account.

8. Do I need to submit separate KYC documentation to avail Home OD Facility?

   No. Under the Multi Advantage Product, the common set of KYC documentation will be used for home loan, savings account as well as the linked OD account. Addendum applications for savings and OD account will be collected together with the home loan application form.

9. Do I have the option to structure my loan as partly fixed or partly floating?

   Yes, you can structure your ICICI Bank Home Loan as Partly Fixed or Partly Floating as per your needs.

10. What are the maximum number of properties that I can own?

    You can own as many properties as you want.

11. What is a down payment?

    Down payment is the amount that is paid by the borrower on an up-front basis. Banks usually pay around 75% to 85% of the cost of the property, hence the rest amount the borrower needs to pay as down payment.

12. What is the average tenure of a home loan?

    Home loans average tenure ranges generally between 3 and 30 years.

13. Can I pre-pay my ICICI Bank home loan? Is there any penalty?

    Yes. You can pre-pay your ICICI Bank home loan with nil penalty for floating rate home loan and with upto 2% of pre-payment penalty for fixed interest home loan.

14. What security do I need to furnish for ICICI Bank home loan?

    The property purchased out of the loan is taken by ICICI Bank as the security. However, if ICICI Bank feels then it can ask for additional securities too.

15. Who is an NRI?

    NRI or Non Resident Indian is a citizen of India or a foreign national of Indian origin living outside India for the purpose of employment, business or any other vocation, which would indicate his intention to stay outside India for an indefinite period of time. An Indian would also be termed as an NRI if his stay in India is less than 182 days.

16. What is the mode of payment for NRI home loans?

    Generally, payments are made through NRI Account like NRO, NRE, NRNR and FCNR accounts. NRI home loan can be paid by way of direct remittances from abroad through normal banking channels or from other financial accounts as may be permitted by RBI.

17. What kind of job makes me eligible for ICICI Bank home loan?

    You can either be a salaried employee or self-employed for obtaining this loan. However, the only condition is that you should be earning a regular income and should be able to furnish proofs of the same.

18. What is the tax benfits available on ICICI Bank home loan?

    As per Section 80C of the Income Tax Act, in case of the principal amount, you can claim a deduction of upto Rs 1.5 lakhs while in case of interest, it is upto Rs. 2 lakhs.

19. Are long-term home loans beneficial or short-term loans?

    It dependes on the financial status of the borrower. If he wants lower EMIs then Long-term loans, if not, then he can go with short-term loans with higher EMIs with the benefit of lesser interest.

20. Do I have to pay only fixed rate of interest or floating rate is also there in ICICI Bank Home Loan?

    No, you have the option to choose any kind of rate of interest you want to pay. You can pay floating rate of interest which is linked with the MCLR and keeps changing from time to time.

21. My EMI is increased due to an increase in the rate of interest being it flexible. What do I do for lower EMI?

    EMI increases with the increase in the rate of interest if you have opted for floating rate. You may ask your bank for increasing the loan tenure, if you want to get your EMI reduced or you can make some part pre-payment to your bank for reduction in EMI.

22. What are different modes of payment of EMI of ICICI Bank Home Loan?

    The EMI can be paid through various modes such as Post dated cheques, Electronic Clearing Service (ECS), Standing Instruction (SI), etc.

23. Can I apply for a home loan to renovate my home or flat?

    Yes, you can apply for home loan for any purpose such as buying a home, constructing a home, repairing of your home, home improvement, balance transfer and home renovation.

24. What is the difference between EMI and Pre-EMI?

    You repay your home loan through Equated Monthly Instalments (EMI), which includes principal and interest component. EMI repayment starts from the month subsequent to the month of final disbursement. Pre-EMI is only a simple interest, which you are required to pay every month till the loan is not fully disbursed.

25. How to get my Income Tax certificate from ICICI Bank?

    Income Tax certificate will be despatched to your after the end of financial year by ICICI Bank. You may also contact your nearest ICICI Bank branch or your can also send a request through its website for the same.