What is Home Loan Subsidy By The Government
The Pradhan Mantri Awas Yojana introduced by the Government of India targets to provide housing for all by March, 2022. CLSS or Credit Linked Subsidy Scheme for LIG/EWS or MIG (I&II) is a significant vertical of PMAY. The other three components are In Situ Slum Redevelopment, Beneficiary Led Construction and Affordable Housing in Partnership.
The CLSS scheme extends financial assistance, including interest subsidy on home loan to eligible individuals via various financial organisations in India.
The government with this programme 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.
Borrowers willing to avail a Home Loan from lending organisations including Bajaj Finserv under PMAY scheme can enjoy concessions on interest rates.
Who Are Eligible For This 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. The features of this scheme can be divided according to the financial backgrounds of households.
For applicants belonging to the EWS or Economically Weaker Section:
- 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 30 square metres.
For applicants falling under the LIG or Lower Income Group:
- Yearly 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.
Applicants from the EWS and LIG categories can avail a maximum home loan subsidy of up to Rs. 2.67 Lakh.
For those falling under the Medium Income Group or MIG I:
- Annual income of the household – from Rs. 6 Lakh to 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 120 square metres.
For individuals belonging to the MIG II category:
- Yearly income of the household – from Rs. 12 Lakh to 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 150 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: 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, lobby, etc.
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 1st 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 case of married applicants, either or both the spouses can qualify to avail subsidy on home loan by the government 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 utilized 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.
Besides the categories mentioned above, the government has now extended the subsidy benefits to the ignored sections of the society, including transgender individuals and widows.
What Are The Benefits Of CLSS Scheme?
- Borrowers receive the subsidized amount from the government directly in their loan account. This brings down their outstanding principal amount, thus, reducing the EMIs.
- As EMIs become more manageable, it’s easier to repay the housing loan. Alternatively, if borrowers choose to pay the actual EMIs, 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, they can claim tax exemptions of up to Rs. 2 Lakh on the payable interest and up to Rs. 1.5 Lakh on the principal repayment in one fiscal.
Take an example:
Suppose you avail a loan of Rs. 32 Lakh for a repayment tenor of 20 years, and you come under the MIG II category. Usually, the EMIs per month stand at 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 come down 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 it’s your 1st pucca house to be eligible.
How To Apply For This 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 collaborated with NHB and HUDCO.
Steps to apply:
- Get in touch
Contact Bajaj Finserv and detail your intentions of taking the loan. Ensure to meet the eligibility criteria for CLSS benefits.
- Application form
You will receive a loan subsidy application. Fill it with accurate details as required.
- Documentation
Once done, submit the application form along with all the documents required. Make sure to submit updated papers.
- Loan disbursal
Get your loan amount disbursed in your account post the verification of documents.
- Reimbursement of subsidised funds
Bajaj Finserv shall next approach the nodal agencies to process your application and reimburse the subsided funds in your loan account.
Note that no lending institution can charge any additional fees to sanction a home loan under CLSS.
Why Approach Bajaj Finserv For A Home Loan With Interest Subsidy?
Bajaj Finserv brings the best Home Loan customised to meet the property buying or construction needs of borrowers. Get interest subsidy on first Home Loan and save huge amounts up to Rs. 2.67 Lakh. As an earning member of the family, get this affordable housing loan to own a property in your name.
Bajaj Finserv also offers high-value financing for both salaried and self-employed individuals. Salaried applicants can apply for a loan starting from Rs. 10 Lakh up to Rs. 3.5 Crore. Self-employed borrowers can avail up to Rs. 5 Crore.
Meet the following eligibility criteria for faster approval:
- Must be an Indian citizen residing within the country.
- Age bracket: 25 – 70 (self-employed) and 23 – 62 (salaried).
- Minimum work experience: 5 years of business vintage (self-employed) and 3 years (salaried).
Check the complete eligibility criteria for Home Loan for minimum salary requirements as per state of residing. Once you qualify, apply for this Mortgage Loan and avail exclusive benefits such as:
- Part-prepayment and foreclosure facilities.
- Flexi Hybrid feature that reduces your EMIs almost by half.
- Tailored property dossier.
- Online account management facility 24*7.
Furthermore, you get the benefit of easy Home Loan Balance Transfer facility and Top-Up Loans of up to 50% of the sanctioned loan amount. Top-Up Loan is an additional credit which you can avail to invest in related expenses like purchasing furniture, extending a portion, etc.
Note that, 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 levies 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 which 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. Also, you can evaluate if the preferred loan amount is feasible for you, considering your financial capabilities.
According to recent reports, as on March 31st, 2019, the government of India has disbursed a subsidised amount of more than Rs. 12,000 Crore under its Credit Linked Subsidy Scheme across the nation.
So, apply for a Home Loan with Bajaj Finserv today for the best features and benefits and get your first house effortlessly.
