Subsidy on home loan
Borrowers who avail of a home loan from lenders such as Bajaj Finance under the PMAY scheme can enjoy an interest subsidy of up to Rs. 2.67 lakh. The maximum of Rs. 2.67 lakh subsidy on home loan can be availed under revised EWS/LIG scheme. The interest subsidy is provided for a tenure of 20 years at a rate of 6.5%.
Home loan subsidy offered under Pradhan Mantri Awas Yojana
The Pradhan Mantri Awas Yojana (PMAY) introduced by the Government of India, aims to provide housing for all by March 2022 but then extended till December 2024. The Credit Linked Subsidy Scheme is a significant part of PMAY, which offers a home loan interest subsidy to borrowers. The other three components of PMAY are In-Situ Slum Redevelopment, Beneficiary-Led Construction, and Affordable Housing in Partnership.
The Credit Linked Subsidy Scheme (CLSS) extends financial assistance to eligible individuals via various financial organisations in India. With this program, the government promotes the increase of credit flow in financial institutions towards housing requirements. The National Housing Board and the Housing and Urban Development Corporation are the central nodal agencies who have received the authorisation to take this project forward.
Pradhan Mantri Awas Yojana - Credit Linked Subsidy Scheme (PMAY-CLSS) details
Here are the details of the Pradhan Mantri Awas Yojana - Credit Linked Subsidy Scheme (PMAY-CLSS):
|Pradhan Mantri Awas Yojana - Credit Linked Subsidy Scheme (PMAY-CLSS)
|To provide affordable housing to economically weaker sections, low-income groups, and mid-income groups
|Economically Weaker Sections (EWS), Low-Income Groups (LIG), and Middle-Income Groups (MIG)
|Income criteria vary based on EWS, LIG, and MIG categories
|Types of houses
|New construction or extension of existing houses
|Interest subsidy on home loan interest rates
|Interest subsidy categories
|EWS and LIG: Up to 6.5% interest subsidy on a maximum loan amount of Rs. 6 lakh
MIG I: Up to 4% interest subsidy on a maximum loan amount of Rs. 9 lakh
MIG II: Up to 3% interest subsidy on a maximum loan amount of Rs. 12 lakh
|Maximum loan tenure
|EWS: Up to 30 square meters
LIG: Up to 60 square meters
MIG I: Up to 160 square meters
MIG II: Up to 200 square meters
|Apply through eligible banks, housing finance companies, or financial institutions
|Validity of scheme
|Till March 2022
|Reduction in monthly home loan EMIs, making homeownership more affordable
|Online application portal
|CLSS Awas Portal (https://pmayuclap.gov.in)
Who is eligible for the Pradhan Mantri home loan subsidy?
The interest subsidy on home loan by the government of India is available for 3 income groups: EWS, LIG, and MIG. Read on to know more about the eligibility criteria for the EWS or Economically Weaker Section. The annual income of the household – up to Rs. 3 lakh
- Home loan amount on which subsidy is calculated – up to Rs. 6 lakh
- Rate of interest subsidy – 6.50%
- The house’s carpet area – up to 60 square metres
Eligibility criteria for the lower income group
For applicants falling under the LIG or Lower Income Group
- Yearly income of the household – from Rs. 3 lakh up to Rs. 6 lakh
- Home loan amount on which subsidy is calculated – up to Rs. 6 lakh
- Rate of interest subsidy – 6.50%.
- The house’s carpet area – up to 60 square metres
Applicants from the EWS and LIG categories can avail of a maximum home loan subsidy of up to Rs. 2.67 lakh.
Eligibility criteria for the medium income group I
For those falling under the Medium Income Group or MIG I
- The annual income of the household – from Rs. 6 lakh up to Rs. 12 lakh
- Home loan amount on which subsidy is calculated – up to Rs. 9 lakh
- Rate of interest subsidy – 4%
- The house’s carpet area – up to 160 square metres
Eligibility criteria for the medium income group II
For those falling under the Medium Income Group or MIG II
- Yearly income of the household – from Rs. 12 lakh up to Rs. 18 lakh
- Home loan amount on which subsidy is calculated – up to Rs. 12 lakh
- Rate of interest subsidy – 3%
- The house’s carpet area – up to 200 square metres
Eligible candidates from MIG I & MIG II categories can avail a maximum subsidy on home loan interest of up to Rs. 2.35 lakh.
Note: The carpet area is the actual area within the walls where you can lay a carpet. It is excluding the inner wall’s thickness and common spaces like stairs or lobby.
Other eligibility criteria for PMAY subsidy
Apart from the annual income, applicants must fulfil the following requirements:
- For EWS/ LIG groups, a female member must own or co-own the house (with terms and conditions applied).
- No member of the household should own a pucca house anywhere in this country. The new property must be their first house
- The beneficiary family must not have availed any government-backed housing scheme before
- The family availing the CLSS benefits must comprise the husband and wife along with their unmarried children (son/ daughter)
- In the case of married applicants, either or both the spouses can qualify to avail the subsidy on a home loan on a single property
- An adult earning member of a family is considered as an independent beneficiary of this home loan interest subsidy
- A subsidy on home loan interest rate is applicable on funds utilised for the purchase, construction, or renovation of a residential property. However, MIG I and MIG II applicants can use the loan amount only to purchase a house
- Under this PMAY CLSS scheme, the maximum tenor of a home loan must be 20 years
When approving applications for the CLSS benefit, the government further prioritises women, transgender individuals, minorities, and widows to encourage homeownership.
What are the benefits of CLSS?
- Borrowers receive the subsidised amount from the government directly in their loan account. This brings down their outstanding principal amount, thus reducing their subsequent EMIs
- As EMIs become more manageable, it’s easier to repay the housing loan. However, if borrowers choose to continue paying the original EMI amount, the loan tenor shortens. As a borrower, you can select a suitable option as per your requirements
- Applicants claiming this interest subsidy can also avail tax benefits on the home loan. According to the IT Act 1961, tax exemptions of up to Rs. 2 lakh on the payable interest and up to Rs. 1.5 lakh on the principal repayment may be claimed in one fiscal year
Here’s an example:
Say you avail a loan of Rs. 32 lakh with a repayment tenor of 20 years, and you come under the MIG II category. Usually, the EMIs per month come to around Rs. 31,000. Now, the loan amount eligible for the interest subsidy is Rs. 12 lakh. If you calculate your EMIs with a 3% rate of subsidy based on the Excel PMT formula, the EMIs reduce to around Rs. 7,000 per month.
Use the online Pradhan Mantri Awas Yojana calculator offered by Bajaj Finserv to check your subsidy amount and the category you fall into instantly. You only need to enter the following details – repayment tenor, home loan amount, annual income of your household, and carpet area. Also, confirm that this is your 1st pucca house to be eligible.
How to apply for the home loan subsidy?
Eligible applicants can directly apply for a home loan under CLSS with PLIs or Prime Lending Institutions. PLIs are the financial institutions including NBFCs, cooperative banks, regional rural banks, and others who have partnered with the central nodal agencies to offer subsidised rates on housing loans. Close to 70 financing organisations have collaborated with NHB and HUDCO. Here are the steps to follow.
- Get in touch
Contact us and ensure that you meet the eligibility criteria for CLSS benefits.
You will receive a loan subsidy application form. Fill it with accurate details.
- Submit documents
Submit the application form along with all the documents required. Make sure to submit updated papers.
- Get the loan
The loan amount is then disbursed to your account after the verification of documents and property.
- Reimbursement of subsidy
Bajaj Finserv will approach the nodal agencies to process your application and reimburse the subsided funds in your loan account.
Note: No lending institution can charge any additional fees to sanction a home loan under CLSS.
The validity of the PMAY scheme has not been extended.
- The EWS/ LIG schemes have been discontinued w.e.f. March 31, 2022
- The MIG schemes (MIG I and MIG II) have been discontinued w.e.f. March 31, 2021
Why approach Bajaj Finserv for a home loan with interest subsidy?
Bajaj Finserv offers one of the most competitive housing finance solutions customised to meet your property buying or construction needs. Get an interest subsidy on your first home loan and save up to Rs. 2.67 lakh by applying for a loan with us and enjoy a competitive interest rate too. As an earning member of the family, get this affordable housing loan to own a property in your name.
Bajaj Finserv offers high-value financing for both salaried and self-employed individuals. Salaried applicants can apply for a loan starting from Rs. 10 lakh. Meet the following eligibility criteria for faster approval on your home loan.
28 to 58 years for salaried individuals, 25 to 70 years for self-employed
At least 3 years of experience for salaried individuals, at least 5 years of business continuity for self-employed individuals.
750 or higher
Check the complete eligibility criteria for home loan to see the minimum salary requirements as per your state of residence.
Benefits of Bajaj Finserv Home Loan
Once you qualify, apply for this mortgage loan and avail exclusive benefits such as the following.
- No part-prepayment and foreclosure charges
- Value-added services such as property search and a property dossier
- Online account management facility 24X7
- Online Home Loan
- Minimal documentation
- Digital Sanction Letter in minutes
- Flexible tenor
- Flexi Hybrid feature that reduces your EMIs almost by half in the initial tenor
Further, you get the benefit of an easy home loan balance transfer facility to switch your home from your existing lender to us to enjoy lower interest rates. In this case, you can also get an ample top-up loan. This refers to an additional credit that you can avail to address home-related or any other expenses at a nominal rate of interest.
Note: If you have already received an interest subsidy on existing home loan, you cannot claim another subsidy when availing the balance transfer facility for better rates.
Compute your monthly instalments beforehand
Bajaj Finserv offers one of the most affordable home loan interest rates along with nominal associated charges and no hidden fees. You can check your monthly outflows towards the loan repayment using our Home Loan EMI Calculator.
It is an online calculator that computes your loan EMIs, total payment including principal and interest and total payable interest instantly. Simply provide the basic details – loan amount, your preferred tenor and the rate of interest. It functions on the mathematical formula EMI = [P x R x (1+R)^N]/[(1+R)^N-1].
This online EMI calculator helps you plan your repayment strategically and manage your finances better. You can also use it to evaluate if the preferred loan amount is feasible for you, considering your financial capabilities.
So, apply for a home loan from Bajaj Finserv today for the best features and benefits and get your first house effortlessly.
Frequently asked questions
A housing loan subsidy is a financial assistance program provided by the government to make housing more affordable for specific segments of the population. It aims to reduce the burden of housing loan repayments for eligible individuals and families, particularly those belonging to economically weaker sections and low- to middle-income groups. This subsidy is often offered as a part of government housing schemes to encourage home ownership and address the housing needs of underserved communities.
The Rs. 2.67 lakh subsidy on a home loan is likely a reference to the maximum subsidy amount provided under the Credit-Linked Subsidy Scheme (CLSS) component of the Pradhan Mantri Awas Yojana (PMAY) in India.
The Rs. 2.67 lakh subsidy on a home loan is associated with the Credit-Linked Subsidy Scheme (CLSS) under the Pradhan Mantri Awas Yojana (PMAY) in India. This subsidy is primarily targeted at individuals falling under the Economically Weaker Sections (EWS) and Lower-Income Groups (LIG).
The eligibility criteria for availing the PMAY home loan subsidy (under the CLSS scheme) include being an Indian citizen, not owning a pucca house anywhere in India, and falling under specific income categories: EWS, LIG, MIG I, or MIG II. The property's carpet area, location, and the type of housing loan are also considered. For precise details, refer to the official PMAY-CLSS guidelines.
The maximum subsidy amount you can claim under the Credit Linked Subsidy Scheme (CLSS) of the Pradhan Mantri Awas Yojana (PMAY) varies based on the income category you belong to. As of my last update in September 2021, here are the maximum subsidy amounts for each income category:
Economically Weaker Sections (EWS): Up to Rs. 2.67 lakh
Low-Income Groups (LIG): Up to Rs. 2.67 lakh
Middle-Income Group (MIG I): Up to Rs. 2.35 lakh
Middle-Income Group (MIG II): Up to Rs. 2.30 lakh
Yes, you can avail of the home loan subsidy under the Credit Linked Subsidy Scheme (CLSS) of the Pradhan Mantri Awas Yojana (PMAY) if you want to purchase a newly constructed house that is for sale. The PMAY-CLSS subsidy is designed to encourage affordable housing, including the purchase of new houses, and supports various types of housing transactions, including the purchase of newly constructed properties.
While the Pradhan Mantri Awas Yojana (PMAY) aims to provide affordable housing to a wide range of beneficiaries, there are certain categories of individuals who may not be eligible to avail the benefits of the scheme.
- Ownership of pucca house Income above eligibility criteria
- Property location
- Exclusion based on family members
- Undisclosed income
- Incomplete documentation
There is no provision under the PMAY-CLSS for providing subsidies on existing home loans at that time. The subsidy was typically applicable to new loans taken specifically for the purpose of purchasing or constructing a house.