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2 mins Read | 11 Months Ago

What is Money Saver Home Loan Scheme - ICICI Bank

Interest Benefit in Money Saver Explained

With the rising real estate prices in India, a Home Loan is the only way through which most people fulfil their dream of buying a home. To better meet the needs of the borrowers, lenders in India now offer different types of Home Loans.

Money Saver is an Overdraft-based Home Loan facility, designed for customers that want to minimise their interest burden by parking their savings/surplus funds in a Money Saver Account and reduce the interest outgo. At the same time, the customer gets complete flexibility to withdraw the surplus funds, anytime, anywhere and as per their convenience.

Key benefits of Money Saver:

  • Overdraft-based Home Loan facility

  • Minimise Interest on Loan by parking surplus funds in an Overdraft Account

  • Surplus funds can be withdrawn anytime, anywhere and as per convenience

  • Reinvest the interest savings and enjoy higher returns.

What is Amortisation Schedule?

The principal deduction in Money Saver follows the Amortisation Schedule. So, before diving deep into how Money Saver works, let us understand what is the Amortisation Schedule. Simply put, Amortisation Schedule is a table that provides the principal and interest amounts for a loan, on the basis of the Loan Amount, ROI and Tenure. Here is what a 1-year Amortisation Schedule looks like, for a customer who has taken a loan of Rs 50 lakh at 9.0% per annum, for a period of 20 years.

Month

Loan Outstanding (Rs)

EMI (Rs)

Interest (Rs)

Principal (Rs)

Loan Outstanding after paying EMI (Rs)

1

50,00,000

44,986

37,500

7,486

49,92,514

2

49,92,514

44,986

37,444

7,542

49,84,971

3

49,84,971

44,986

37,387

7,599

49,77,372

4

49,77,372

44,986

37,330

7,656

49,69,716

5

49,69,716

44,986

37,273

7,713

49,62,003

6

49,62,003

44,986

37,215

7,771

49,54,232

7

49,54,232

44,986

37,157

7,830

49,46,402

8

49,46,402

44,986

37,098

7,888

49,38,514

9

49,38,514

44,986

37,039

7,947

49,30,566

10

49,30,566

44,986

36,979

8,007

49,22,559

11

49,22,559

44,986

36,919

8,067

49,14,492

12

49,14,492

44,986

36,859

8,128

49,06,364

How Money Saver works

In Home Loan EMI, Principal and Interest are deducted from the same account i.e. a Savings Account. However, in Money Saver there are two accounts involved:

  • Principal is deducted from the Money Saver OD Account

  • Interest is deducted from the linked Savings Account.

Let us understand Principal Repayment in Money Saver:

Principal Repayment follows the drop line structure in an Overdraft Account where, at the end of the tenure, the principal amount will be zero. The principal amount is calculated as per the normal Amortisation Schedule.

If the customer has parked surplus funds in a Money Saver OD Account, the principal gets deducted automatically from the OD Account. The OD limit reduces monthly by Principal Amount. Further, surplus funds parked in the OD Account reduces by Principal Amount. If the customer has not parked funds in an OD Account, every month the customer will need to transfer the amount in the OD Account, before the due date. The OD Limit reduces monthly by Principal Amount.

Let us understand Interest Repayment in Money Saver:

The main benefit of investing in Money Saver is interest savings on the loan. Unlike Home Loans, in Money Saver, the interest is calculated on a “daily basis” on the principal outstanding minus the surplus amount maintained in the account. This reduces the interest outgo. Interest accrued is automatically debited from the linked Savings Account. So, transfer your loan to ICICI Bank Money Saver and enjoy enhanced savings.

 

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