Many of us work really hard and have a desire to buy our dream home. But very often, the rise in cost of living, along with steep interest rates and high property prices deter us from taking a decision. But now, aiding to provide a push to the housing sector (which has been experiencing a slump) and to give a flight to your desire to buy a dream home, banks are out with teaser festive offers.

Recently ICICI Bank launched a cash back offer, whereby 1% of every EMI (Equated Monthly Instalment) will be returned back to customers, wherein either it could be credited to the customers savings account, or adjusted the outstanding principal amount.

In case if one opts for the principal pay down option (as any prudent borrower would do), the adjustment from the outstanding principal amount will be from the third year including the first two years' dues, and by the end of the fiscal from fourth year onwards ), according to the bank.

The offer is a part of the festive scheme, and is available until end of December 2012 for new customers, and includes an option to remain on fixed or floating rate at no cost. It is noteworthy that since credit off take has remained lukewarm due to protracted high interest rate scenario, many other banks to have launched schemes to woo customers. For instance, Axis bank launched a scheme, wherein a home loan borrower will get 12 EMIs waived if he/she remains with the bank for 15 year or more. Likewise there have been some state run banks such as State Bank of India and Central Bank of India, which have attempted to stimulate a family’s desire to even own a car by launching combo loan offers, wherein a home loan customer gets a car loan without the process fee, apart from slashing interest rates by up to 0.50%.

We are of the view that, such teaser offers are attempted to provide an impetus to the housing sector which has seen a lull in the near past due to rise in material cost and drying demand due to stiff interest rates. For customers, we think the cash back offer could enable them to save on their hard earned money, but we think that adjusting the outstanding principal amount principal option is more prudent as it can facilitate to save on interest outflow attached to the principal amount.

Having said that, one should not be too wooed by such teaser offers and overleverage (i.e. one should live within means), as that could derail their personal finances and household budgets. It is imperative to plan your personal finances well, to live a blissful life ahead.

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