Good News for Home Buyers: Housing Loan Subsidy Extended for Middle Income Group

Good News for Home Buyers: Housing Loan Subsidy Extended for Middle Income Group

Your plans to buy a home in 2020 need not take a backseat owing to financial disruptions caused by COVID 19. The government has extended the deadline for CLSS (interest subsidy on the home loan) up till 31 March 2021 for the middle-income group.

Besides, a recent Magicbricks Survey has also stated that real estate prices will go southwards after the lockdown by at least 15-25 % across the country.

A little planning can help you save anywhere between Rs 5 Lakh to 15 Lakhs in your home purchase in a metro city. The exact coordinates will vary according to your annual income, home loan value, and property location.

Here in this article, let’s find out how a government subsidy can help you save Rs 2.35 lakh upfront in interest payment of your home purchase.

Best Home Loan Interest Rates in India Book Your Home Under PMAY Yojana

What is CLSS Housing Subsidy Scheme?

Households earning annual income ranging from Rs 6 Lakh to Rs 18 Lakh can apply for 3 to 4 % of interest subsidy on Home Loans ranging from 9 Lakh to 12 Lakhs. This results in an upfront reduction in the Home Loan amount and EMI.

Pradhan Mantri Awas Yojana (PMAY) is the flagship scheme of PM Narendra Modi to provide affordable housing to 22 crore families. Under Credit Linked Subsidy Scheme (CLSS), even middle-income earners can avail of interest subsidy on home loans for their first home purchase. This is the last phase of the CLSS.

As per government records,  over 3.3 lakh MIG families have utilised the benefits of CLSS, and as many as 2.5 lakh more families will benefit by the end of the financial year 2020-21.

CLSS Benefits to Middle Income Group in a glance:

Particulars MIG I MIG II

Household Income (Rs.)

6-12 lakh

12-18 Lakh

Carpet Area in sqm

160

200

Interest Subsidy (% p.a.)

4.0%

3.0%

Maximum Loan Tenure

20 years

20 years

Eligible Loan Amount (Rs)

9,00,000/-

12,00,000/-

Upfront amount for Subsidy (Rs.) for a 20 Year Loan

2,35,068/-

2,30,156/-

Approx. monthly savings @ Loan Interest of 10%

2,250/-

2,200/-

How does Housing Subsidy benefit you?

The CLSS classified the middle-income group into two categories: MIG I & MIG II.

The Middle Income Group, Category I, are the households that make annual household income between Rs. 6 lakh to Rs 12 lakh. They are entitled to a flat subsidy of 4% on the interest rate of a 20-year loan. The subsidy is offered on a loan amount of Rs 9 lakh only. The balance amount of the loan is charged at regular price.

Likewise, Middle Income Group, Category II comprises household making annual incomes between Rs 12 lakh to Rs 18 lakh. They earn interest subsidy of 3% on a 20-year loan. The subsidy is offered on a maximum loan amount of Rs 12 lakh. The balance loan is treated normally at the non-subsidized rate provided by the lender.

The benefit is offered upfront. The approved loan subsidy amount is deducted from the loan account, resulting in lower loan principal and EMI.

How is the Annual Income of a Household assessed?

The annual income of the family or household includes aggregate income earned by all earning members of a family, i.e., husband, wife, unmarried sons, and unmarried daughters.

How do I calculate the CLSS subsidy amount I am eligible for?

You can calculate the amount of subsidy you are eligible for at the CLSS EMI Calculator on the PMAY official website. Here is the link:
http://www.pmaymis.gov.in/EMI_Calculator.aspx

Also note that the CLSS subsidy amount would vary based on the category of applicant, the quantum of loan, tenure, and interest rate.

What are the eligibility criteria for CLSS benefit for MIG?

Apart from meeting annual family income criteria range of Rs 6 Lakh to Rs 12 Lakh for MIG1 category and Rs 12 Lakh to Rs 18 Lakh for MIG 2 Category, following factors also need to be adhered to:

  • The scheme is available only to those families wherein none of the members own a pucca house or an all-weather dwelling unit in any part of India.
  • For MIG I, the benefit is available for acquiring or constructing a house with a carpet area of up to 160 square metres.
  • For MIG II, the total carpet area of the house should not exceed the limit of 200 sq.m.
  • For applying subsidy, the house must have the basic infrastructure available, like water, sanitation, sewerage, electricity, and accessibility to road transport.

What is the maximum amount of saving under PMAY?

The Economically Weaker Section (EWS) and Low-Income Group (LIG) earn a maximum subsidy of Rs 2.67 lakh. Whereas, the middle-income groups, MIG I & MIG II, can earn a subsidy of Rs 2.35 lakh and 2.30 lakh, respectively. The subsidy deadline for EWS & LIG has been extended for two years, while for MIG 1 & MIG 2, the deadline is extended till May 31, 2021.

How to Apply for CLSS PMAY benefit?

You can avail of a housing loan subsidy on a Home Loan from any commercial bank, housing finance company, or lending institution for purchase or construction of your first residential property. There is no processing fee on the loan amount valid for subsidy.

Steps to apply for CLSS:

  • Contact the lender and share your concern.
  • Fill up the application form and attach vital documents like Aadhaar, PAN, along with a self-certificate or affidavit as proof of income.
  • The lender will assess the eligibility norms and then send the claim for the subsidy to CNA (Central Nodal Agency).
  • The claim is finally approved and transferred to the lender by CNA. The amount will automatically get adjusted against the outstanding loan.
  • It may take three to four months to get the sanction. You can track the status of the CLSS application at- pmayuclap.gov.in.

 

Also Read: RBI Expected to Extend loan Moratorium Scheme by Another 3 Months

 

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