Home Loan with a Fixed Deposit or Money Saver Home Loan? Choose Wisely

Interest Benefit in Money Saver Explained

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Surplus funds can be withdrawn anytime, anywhere and as per convenience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