Cheap Home Loan

Why SBI home loan is still the cheapest option?

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.

Home Loan Comparison – SBI, ICICI, AXIS
State Bank of India ICICI Bank Axis Bank
Loan Amount 40,00,000 40,00,000 40,00,000
Interest Rate (%) * 10.15 10.5 11
Tenure (months) 240 240 240
EMI 38,999 39,935 41,288
Interest Payment 5,359,816 5,584,447 5,909,009
Total Payment (Principal + Interest) 9,359,816 9,584,447 9,909,009
Discount 0 95,844 4,95,450
Actual repayment 9,359,816 9,488,602 9,413,558
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.

Published by

Prashant Bendale

Prashant Bendale is an author at I & Finance and an avid investor. He is a mechanical engineer from a reputed institute, an experienced IT professional and loves to author articles for I & Finance to share his knowledge with everyone who needs help with Finance.

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