A "low interest" loan shouldn't mean you have very little interest in paying it back!
ICICI Bank is one of the most prominent banks in India that provides remarkable financial products and services. The housing loans provided by the bank are coupled with notable innovation and economical rates of interest. The base rate or MCLR of ICICI Bank have been constantly reducing over the last few years, giving customers a great deal on loans. Currently headquartered in Mumbai, the bank has grown to be one of the leading banks in the country in terms of growth and network.
The MCLR rates effective from 1 October 2021 are:
| Tenure | ICICI Bank MCLR Rates |
|---|---|
| Overnight | 7.00% |
| 1 month | 7.00% |
| 3 months | 7.05% |
| 6 months | 7.20% |
| 1 year | 7.25% |
The first thing to keep in mind before switching from base rate to MCLR for ICICI Home Loan is the cost of transfer. Banks usually charge a borrower for switching from base rate to MCLR. This fee can range from anywhere between Rs.5,000 and Rs.20,000, depending on the bank. If you only have a few more months of EMI to be paid, consider this before planning to switch to MCLR.
The most important aspect to keep in mind before making a switch is the current outstanding balance, EMI and the interest cost on transfer of loan to MCLR. Consider the outstanding amount and calculate the interest payable on that amount in base rate and MCLR to work out which will be the more economical alternative.
If you still manage to save a considerable amount of money after bearing in mind the fees and the new interest rate, it would be a wise decision to switch over to the MCLR system.
Switching from Base Rate to MCLR in ICICI Bank Involves the Following Steps.
| Revised Date | Overnight MCLR | 1 Month MCLR | 3 Months MCLR | 6 Months MCLR | 1 Year MCLR |
|---|---|---|---|---|---|
| 1 February 2020 | 7.05% | 7.05% | 7.10% | 7.25% | 7.30% |
| 1 January 2020 | 7.05% | 7.05% | 7.10% | 7.25% | 7.30% |
| 1 December 2020 | 7.10% | 7.10% | 7.15% | 7.30% | 7.35% |
| 1 November 2020 | 7.10% | 7.10% | 7.15% | 7.30% | 7.35% |
| 1 October 2020 | 7.10% | 7.10% | 7.15% | 7.30% | 7.35% |
| 1 September 2020 | 7.15% | 7.15% | 7.20% | 7.35% | 7.40% |
| 1 August 2020 | 7.20% | 7.20% | 7.25% | 7.40% | 7.45% |
| 1 March 2020 | 7.90% | 7.90% | 7.95% | 8.10% | 8.15% |
| 1 October 2019 | 8.20% | 8.20% | 8.25% | 8.40% | 8.45% |
| 01 March 2019 | 8.55% p.a. | 8.55% p.a. | 8.60% p.a. | 8.75% p.a. | 8.80% p.a. |
| 01 February 2019 | 8.55% p.a. | 8.55% p.a. | 8.60% p.a. | 8.75% p.a. | 8.80% p.a. |
| 01 January 2019 | 8.55% p.a. | 8.55% p.a. | 8.60% p.a. | 8.75% p.a. | 8.80% p.a. |
All existing customers have an option to switch from the existing system to the MCLR system without considerably changing the operative interest rate on the loan. This would effectively be free of charge and will also be provided instantaneously, with immediate effect.
Switching from the FRR//PLR/I-Base based benchmark to MCLR in ICICI bank involves the following steps.
Request the bank in writing to switch your home loan from the base rate scheme to MCLR
After the loan is linked, request the banker to reduce the quantum of your interest. This may include a one-time fee, but the rate of interest payable by you will reduce henceforth
Every bank has the liberty to set their own MCLR. This is the base rate, below which a bank may not lend. Therefore, it is possible for different banks to have different MCLRs.
The benchmark MCLR for home loans availed from ICICI Bank is I – MCLR – 1Y. The reset period on this will an annual reset.
More often than not, it is advisable to opt for the MCLR with a shorter rest period. This is so because interest rates on loans have been falling constantly over the past few years. However, if one speculates the rates of interest to rise in future, it would be advisable to opt for the MCLR with a longer reset period. In short, if you speculate the interest rates to drop, opt for the 6 months MCLR. Whereas, if you speculate the rates of interest to rise, opt for the 12 month MCLR.
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