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Have You Made the Most of Interest Subsidy?

Have You Made the Most of Interest Subsidy?

Jayant Upadhyay

First time homebuyers cheer up! Banks and financial institutions have slashed down the interest rate, home loans are starting from 8.3% onwards. So, your EMI can be significantly reduced. Wait wait….there is another reason to celebrate! There is a way to enjoy the interest subsidy on your home loans.

When you apply for a home loan, be sure to ask for subsidy benefits under Pradhan Mantri Awas Yojana (PMAY) – Credit Linked Subsidy Scheme (CLSS). The maximum subsidy available under CLSS scheme is ₹ 2.67 lakh on tenure of 20 years for home loans. The PMAY subsidy is available for the following sections, their annual income criteria for eligibility is mentioned.

Sections Income Level (Rs.)
Economically Weaker Sections (EWS) 0 to ₹ 300000
Lower Income Group (LIG) 300001-600000
Middle Income Group I 600001-1200000
Middle Income Group II 120001-1800000

There are some other criteria which you check here goo.gl/KPtDpG. If you meet the eligibility criteria, you can enjoy the subsidy benefit.

                                                                             How to Apply?

Individuals who are eligible to avail subsidised interest under the scheme need to make an application to their lenders for the same. Upon approval and verification from central nodal agencies (HUDCO and NHB), the amount of subsidy is upfront credited and reduced from the principal amount of the outstanding loan. The home loan borrower can then choose from paying lower EMIs or repaying the loan faster with the original EMI amounts. The interest subsidy is available on a home loan for maximum up to 20 years. No processing fee is to be charged by banks and housing finance companies from the applicants under the CLSS.

Sections Interest Subsidy Percentage
EWS & LIG ₹ 2.67 lakh 6.50
MIG I ₹ 2.35 lakh 4.00
MIG II ₹ 2.30 lakh 3.00

Nowadays, many banks & financial institutions have signed Memorandum of Understanding (MoU) with central nodal agencies to channelize the subsidy to the common masses. However, it is essential to pick a good real estate developer who can handhold you through the entire process. Buyers under CLSS would be entitled to interest subsidy as well to a lower concessional rate of GST of 8% (Source: Economic Times).

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