As promised in our last article, we will take a look at some more attractive options offered by the banks for home loan borrowers. Today’s article will take a qualitative and quantitative look at the current offers from SBI (State Bank of India), ICICI bank & Axis bank.
State Bank of India’s home loan offering is a plain vanilla scheme with slightly lower interest rate than other banks whereas ICICI bank came up with an innovative plan of 1% cash back on every EMI you pay. Cash back will be deposited in the borrower’s ICICI bank account or can be adjusted against the outstanding loan amount. Axis bank started a new scheme called as ‘Happy Ending Home Loan’. In this offer a home loan borrower will get 12 EMIs waived off if his loan account is active for minimum 15 years.
Let’s take a look at the following illustration which proves that borrowing from SBI is still the cheapest option.
|State Bank of India||ICICI Bank||Axis Bank|
|Interest Rate (%) *||10.15||10.5||11|
|Total Payment (Principal + Interest)||9,359,816||9,584,447||9,909,009|
|Difference in actual repayment compared to SBI||0||128,787||53,742|
* Please note that Interest Rate mentioned in the above table are as per latest values known from our sources for the illustrated loan amount. You should call individual banks to know the interest rate offering for your loan case.
ICICI Bank’s Cash Back Offer
Cash back will be credited to your account only after completing 3 years, thereafter every 1 year till the closing of home loan. This offer also does not include the pre-EMI you’ve paid. Cash back will be credited only to ICICI bank account. This offer does not apply for the prepayment made towards the loan.
Axis Bank’s EMI Waiver Offer
One can get benefit of EMI waiver only if minimum tenure at the time of disbursement is 20 years. Also if you are making part payments in-between, tenure should not fall below 15 years otherwise you will not be eligible for this benefit. Most of the people close their home loan in 8-10 years. So one need to make a decision whether you really want to keep your home loan for such a long time to get this benefit.
Disclaimer: I do not intend to recommend any particular product based on this review. The above analysis is to enable the readers take into account all the aspects of individual products and make a more informed decision.