ICICI ushered in the home loan revolution in 1999 when it pioneered the door delivery concept for home loans for the general mass of population. By 2006, ICICI claimed to have become the leader in the home loan segment. In recent years though the pace of growth has slowed down it continues to be a significant player in the home loan business. ICICI Home loan is a definite inclusion in your check out list before you finalize your home loan lender.
Kinds of Home loans from ICICI Bank
ICICI Bank will provide a home loan for:
Buying a ready to move in house whether from the builder or from another person owning a flat.
Buying an under construction property from a developer or a re-seller. But in such cases the project has to be pre-approved by ICICI or a specific approval has to be sought if you are the first person seeking a loan for that specific project from ICICI.
Buying a plot and self-constructing your house. In such cases the plans need to be approved from the concerned local authorities and loan disbursements will be made depending on the progress of the construction.
Loans are also available for buying a plot, shop, office or other commercial spaces under different plans at higher interest rates and more stringent eligibility conditions.
ICICI Home Loan Eligibility
Your loan eligibility will be the lower of 80%-90% of the agreement value of the property depending on the loan value.Or such that the EMI payable on all loans (including the home loan) will not exceed 45-55% of your net monthly income.
As a rough thumb rule you will be eligible for a home loan of around 4- 4.5 times your gross annual income assuming you have no other loans subject to the loan being less than 80-90% of the agreement value. This rough rule is worked out for a 20 year home loan (which means you will need to be less than 40-45 years of age) assuming interest rate to be around 10.50%.
Whose incomes can be clubbed?
Like other lenders ICICI Bank also will club the income of the husband and wife to arrive at the joint loan eligibility. Additionally it also allows parents and brothers as co-applicants.
Processing fees: This will typically range between 0.56% – 1.12% of the loan amount normally subject to a maximum of around Rs. 11,236/-. The processing fee can be negotiated to a certain extent. Home loan processing fee is usually nonrefundable if you decide not to take the loan for any reason.
ICICI Home Loan Pre-payment charges:
Now there are no pre-payment charges for all floating rate home loans as well as on teaser rate home loans after the interest rate has turned into a floating rate.
Should you opt for a fixed rate ICICI Home loan or a floating rate ICICI Bank Home loan or for a Dual rate ICICI Bank Home loan?
In the current situation (August 2012) interest rates are widely expected to go down so locking into a fixed rate for the full tenure or even a dual rate loan where the rate is locked in for a period of 1-3 years does not make sense. In the current situation a floating rate loan makes sense. Having said that this is not a onetime decision and you should review this decision at least once every six months to make sure that your decision continues to be the right one.
What tenure of home loan should I take from ICICI ?
If you want the highest eligibility, go for the longest possible tenure that ICICI allows on their home loan which is 20 years. The interest rate on ICICI home loans is not lower for lower tenures hence there is no advantage in going for lower tenures especially since there are no pre-payment charges. So as and when your cash flows allow you can always keep making pre-payments without any charges and thus retain cash flow flexibility without giving up the right to pay off your loan quicker than contracted.
Things to watch out for:
There could be a charge for creation of security for ICICI Bank home loans in some states. Check about this. This charge is common across banks.
ICICI Bank will carry out its valuation of the property and you will be eligible for a loan up to 80% (90% in case of loans up to Rs. 20 lakhs) of the agreement value or the valuation made by ICICI Home loan department’s valuer whichever is lower. This may increase the amount of your down payment requirement.
If you work for a large well reputed company which has a tie-up with ICICI Bank home loans you could be eligible for some concessions in the processing fees as also interest rate concessions. Find out about this before you finalize the lender.
Just because a project is pre-approved for an ICICI Bank Home loan does not absolve you from your responsibility as a buyer to check on the title of the property as well as the chances of the timely completion of the project. Please remember if the project is delayed or the title is found to be defective you will continue to remain liable for the loan repayment even though the project had been pre-approved by ICICI Bank’s Home Loan department.