Hi Friends,

What are negatives of ICICI Home Loan Cash back scheme? Are there any hidden clauses? They are promising 1.8 lacs cash back or 5 lacs principal adjustment under this scheme.

If it is as good as they tell... they can beat all the banks! What is the opinion of seniors. Pls suggest!

Rgds,

Ashish Gupta
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  • A small bit of analysis suggests this is more a marketing gimmick

    In this scheme, you save 1% of EMI which is normally 1% of the principle amount (Rs1000pm for loan of 1lakh over 20 years tenure ~10.5%)......effectively, you are saving 0.01% of the principle per month ......... over the life of the loan, this would mean saving of 1.6-1.7% of the total interest paid

    Taking above into consideration, the effective interest cost will be lower by 0.15% (say 10.35% vs 10.5%)....... you can now do the cost benefit analysis for the quote that you get from ICICI vs other banks!
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  • Thanks Arun! Is it possible for you to give the calculation...? That would help me.
    Also, which bank do you recommend for home loan... I am not happy with SBI as their Customer Service is terrible. Pls suggest... thanks
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  • Sure, I will write something on this thread later during the day,

    On bank loan, I would be more comfortable with top tier banks/NBFCs in that order SBI>HDFC>ICICI.......

    If you don't like SBI then HDFC should be the next choice though they might be slightly expensive......By the way, have you had a bad experience with SBI which makes you think bad on their customer service?

    Actually, I have an outstanding loan with SBI in Gurgaon and I am operating this account from Mumbai (where I work) and have not had any issues thus far.... I have been there only once for the first disbursement never before or after that....last two installments were arranged on email request only!

    Yes they don't make you feel cozy when in their office but I am happy that I am getting the best deal and there is low risk of bad play from privates banks/nbfc
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  • Originally Posted by ashishgupta75
    Thanks Arun! Is it possible for you to give the calculation...? That would help me.
    Also, which bank do you recommend for home loan... I am not happy with SBI as their Customer Service is terrible. Pls suggest... thanks


    Below is the calculation,

    Principle - Rs1lakh
    ROI - 10.5%
    Tenure - 240months

    EMI on above - Rs998 p.m. (use =PMT(0.105/12,240,-100000 on a spread sheet)
    Saving on above - 1% of Rs998 = Rs9.98 p.m.
    EMI net of 1% cash back = Rs998-9.98 = Rs988

    Now, lets assume our original EMI is fixed at Rs988 and calculate the new ROI,

    New EMI = Rs988
    Principle - Rs1lakh
    Tenure - 240months

    ROI for above - 10.35% (use =RATE(240,988.4,-100000)*12 on a spread sheet)

    The new ROI is 15bps lower than the original ROI and that's the net benefit to you!

    Hope I am clear!
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  • ICICI 1% cash back calculator

    Hi Guys here is the 1% cash back calculator by ICICI, looks interesting.

    Cash Back Calculator | CashBack Calculator for Home Loan EMI - ICICI Bank India


    for a loan of 34 lacs, here is what you will save at the end of

    End of the year Credit to bank account (rs) Adjustment against principal outstanding (rs)
    4 43014 46221
    5 45137 52024
    6 47323 58195
    7 49570 64417
    8 51878 72430
    9 54246 80601
    10 56672 89595
    11 59157 99714
    12 61697 110620
    13 64292 122930
    14 66940 136139
    15 69640 151088
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