What home loan subsidy does the government offer?

The Pradhan Mantri Awas Yojana (PMAY) introduced by the Government of India, aims to provide housing for all by March 2022. 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.

Borrowers who avail of a home loan from lenders such as Bajaj Finserv under the PMAY scheme can enjoy an interest subsidy of up to Rs. 2.67 lakh.

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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 I

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 factors

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.
  • Apply
    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.

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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. 

  • Nationality

    Nationality

    Indian

  • Age

    Age

    23 to 62 years for salaried individuals, 28 to 70 years for self-employed

  • Employment

    Employment status

    At least 3 years of experience for salaried individuals, at least 5 years of business continuity for self-employed individuals.

  • CIBIL score

    CIBIL score

    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 the Bajaj Finserv Home Loans

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.