Prepaying your home loan can be a strategic move to reduce your financial burden and save on interest costs. From the borrower’s perspective, prepayment charges are a significant consideration when planning the early settlement of a housing loan. If you’re considering settling your ICICI Bank home loan early, here’s everything you need to know about ICICI Bank home loan prepayment policies.
ICICI Bank Home Loan Prepayment Charges 2025
Fixed Interest Rate Loans
| Loan Type | Prepayment Charges |
|---|---|
| Home Loan, Home Improvement Loan, Land Loan, Top Up on Home Loan | 2% on amount prepaid and amounts tendered in the last year. |
| Non-Home Loan (e.g., Loan Against Property, Non-Residential Premises, Lease Rental Discounting, etc.) | 4% on amount prepaid and amounts tendered in the last year. |
| Priority Sector Loans (Small/Micro Enterprises, ≤ ₹50 lacs) | Nil prepayment charges. |
Adjustable Interest Rate Loans
| Loan Type | Prepayment Charges |
|---|---|
| Home Loan, Home Improvement Loan, Land Loan | Nil prepayment charges. |
| Top Up on Home Loan (Non-Business Purpose) | Nil prepayment charges. |
| Top Up on Home Loan (Business Purpose) | 2% on amount prepaid and amounts tendered in the last year. Nil for Priority Sector. |
| Non-Home Loan (Non-Business Purpose) | Nil prepayment charges. |
| Non-Home Loan (Business Purpose) | 4% on amount prepaid and amounts tendered in the last year. Nil for Priority Sector. |
| Money Saver Account | Nil prepayment charges. |
Also Read: How to Calculate the Right Prepayment Amount for Home Loans?
How to Make ICICI Bank Home Loan Prepayment Online?
- Visit the official website of ICICI Bank.
- Click on “Login” and select “Personal”
- Login using your “User ID” or by scanning the QR code.
- Go to “Loans” or “My Accounts” and select your Home Loan Account.
- Look for options like “Part Prepayment” or “Foreclosure”
- Specify the amount you wish to prepay.
- Review and authenticate using your Net Banking Password, OTP, or Biometric Verification.
- The prepayment amount will be debited from your linked ICICI account.
Also Read: How to Download ICICI Bank Home Loan Statement Online?
Home Loan Prepayment Case Study
Sanjay, a 40-year-old IT professional, took a home loan of ₹90 lakh from ICICI Bank to purchase his dream home in Mumbai.
| Parameter | Value |
|---|---|
| Loan Amount | ₹90,00,000 |
| Interest Rate | 8.75% |
| Loan Tenure | 30 years (360 EMIs) |
| Number of EMIs Paid | 60 |
| EMI Amount | ₹70,803 |
| Total Interest Payable | ₹1,64,89,093 |
After reviewing these numbers, Sanjay realized that he would end up paying nearly ₹1.65 crore in interest alone, which was almost twice the loan amount.
The Solution: Prepayment Strategy
Sanjay decided to prepay ₹8 lakh from his savings and annual bonus. This prepayment directly reduced the outstanding principal amount, leading to major financial benefits.
Loan Details (After Prepayment of ₹8 Lakh)
| Parameter | Before Prepayment | After Prepayment | Impact |
|---|---|---|---|
| Outstanding Principal | ₹86,03,996 | ₹78,03,996 | Reduced |
| Total Interest Payable | ₹1,64,89,093 | ₹1,19,85,541 | Saved ₹45,03,552 |
| Loan Tenure Remaining | 25 years (300 EMIs) | 19 years (225 EMIs) | Reduced by 6 years |
| EMI Amount | ₹70,803 | ₹70,803 | Unchanged |
Key Benefits of Prepayment
- Saved ₹45.03 lakh in total interest payments.
- Loan tenure reduced by 11 years (from 30 years to 19 years).
- The EMI remained unchanged at ₹70,803, but the loan would be closed much earlier.
- Sanjay could now focus on other financial goals such as investments and retirement planning.
Also Read: Why Should You Consider Home Loan Prepayment?
Benefits of Prepaying ICICI Bank Home Loan
- Interest Savings: Reduces overall interest paid over the loan tenure.
- Faster Loan Closure: Helps close the loan earlier, reducing financial burden.
- Improved Credit Score: Timely prepayments enhance creditworthiness.
- Lower EMI or Shorter Tenure: Choose between reducing EMI or shortening the loan duration.
- Increased Loan Eligibility: Reducing outstanding debt improves future borrowing capacity.
- Reduced Financial Stress: Lesser monthly commitments lead to better financial flexibility.
- No Prepayment Penalty: ICICI Bank does not charge prepayment fees for individual borrowers with floating-rate loans.
- Better Investment Opportunities: Frees up funds for higher-return investments.
Also Read: Benefits of Home Loans
Who Should Consider Prepaying their ICICI Bank Home Loan?
- High-Interest Payers: If the interest burden is high, prepayment can reduce overall costs.
- Stable Financial Condition: Those with surplus funds or steady income can benefit.
- Short-Term Borrowers: If planning early loan closure, prepayment is ideal.
- Low-Return Investors: Those earning lower returns on savings than loan interest rates.
- Debt-Averse Individuals: If you prefer financial freedom over long-term liabilities.
- Retirement Planners: Ideal for those nearing retirement to avoid post-retirement EMIs.
- Future Borrowers: Reducing existing debt can improve eligibility for other loans.
Conclusion
Prepaying your ICICI Bank Home Loan is a smart financial move that can help reduce interest costs, close the loan sooner, and improve overall financial stability. Whether you aim to lower EMIs, shorten the loan tenure, or enhance future loan eligibility, prepayment offers multiple benefits.
Looking to reduce your home loan burden further? Consider a home loan balance transfer for lower interest rates and better repayment terms. Book a FREE consultation with Credit Dharma to explore your options today!
Frequently Asked Questions
Yes, ICICI Bank permits prepayment of home loans without any penalty after you have paid 6 EMIs.
Prepaying your home loan can reduce overall interest and shorten the loan tenure, but it’s essential to assess your financial situation and other investment opportunities before deciding.
Yes, you can foreclose your ICICI Bank home loan before the end of your loan tenure, and ICICI Bank does not charge any foreclosure fees if you repay using your own funds.
Yes, ICICI Bank offers an online payment facility through their customer portal, allowing you to make EMI payments and prepayments conveniently.
You can prepay up to 25% of the outstanding principal in a year, with a maximum of 10% in a single transaction.
To repay your home loan in five years, consider making higher EMI payments, utilizing bonuses or windfalls for prepayments, and reducing unnecessary expenses to allocate more funds toward the loan.
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