Reduce Home Loan EMIs Under Pradhan Mantri Awas Yojana :
National Housing Bank or NHB has come up with
operational guidelines for availing subsidy under Pradhan Mantri Awas
Yojana (Urban) for middle-income groups. Under the Pradhan Mantri Awas
Yojana (Urban) for middle-income groups, home loan borrowers buying
their first home are eligible for subsidy on interest repayments.
The scheme was earlier announced by the
Prime Minister in his New Year’s Eve address to the nation. Sriram
Kalyanaraman, managing director and CEO of National Housing Bank, termed
the government’s decision to give subsidy to middle-income groups as
“historic”. “This is historic as the middle income group has never been
covered by the subsidy,” he said.
As part of the government’s “Housing For All”
initiative, Prime Minister had announced interest subsidy of 4 per
cent on housing loans of up to Rs. 9 lakh for those with an income of
Rs12 lakh per year and of 3 per cent subsidy on housing loans of up
to Rs.12 lakh for those earning Rs. 18 lakh per year. The scheme has
been named as Credit Linked Subsidy Scheme for Middle Income Groups –
CLSS (MIG). The scheme will be implemented initially for a period of one
year.
Here are 10 highlights of the interest rate subsidy scheme under Pradhan Mantri Awas Yojana (Urban):
1) Home loans sanctioned or
applications are under consideration since January 1, 2017, are eligible
for interest subsidy under the Credit Linked Subsidy Scheme for Middle
Income Groups. The beneficiary earlier should not have own a house in
his/her name.
2) Beneficiaries eligible for interest
subsidy under the CLSS scheme have to apply to their lenders for
availing the subsidy benefit. National Housing Bank will pay the subsidy
upfront to the lender.
3) Mr Kalyanaraman said National
Housing Bank will most likely pay the lender within one week. “We would
just reduce your (borrower) principal as soon as the bank claims with
us. Principal effectively stands reduced to that extent,” he said. To
avail the scheme banks have to get an undertaking from the customers
that this is the only house they have. No extra processing fee will be
charged by the lenders from borrowers.
4) The home loan borrower can then opt for lower EMIs or repay loan faster with original EMI, he added.
5) EMIs under the scheme could get
reduced by Rs. 2,000 to Rs. 2,800 per month, depending on the loan
amount and tenure, and the effective interest on loan could fall by up
to 75 basis points, Mr Kalyanaraman added. Additional loans beyond the
specified limit, if any, will be at non-subsidised rate.
6) The total interest subsidy for
middle-income people over 20 years on Rs. 9 lakh loan and Rs. 12 lakh
loan comes to around Rs.2.30 lakh per beneficiary (the present value of
interest subsidy provided to beneficiaries over the tenure of 20 year
loan at a discounting rate of 9 per cent.)
7) Interest subsidy will be provided
on loans for construction/acquisition of house with carpet area of up to
90 sq metres for those with income of up to Rs. 12 lakh per year and of
up to 110 square metres for those earning between Rs. 12 lakh
and Rs. 18.00 lakh per year.
8) Besides commercial banks, housing
finance companies, regional rural banks, state and urban cooperative
banks, other financial institutions like small finance banks and
non-banking finance company-micro finance institutions can also lend
under this scheme. National Housing Bank has already tied up with many
big lenders and is in the process of signing agreement with many others.
9) Under the scheme, the tenure of
loan has been stipulated to be 20 years or that preferred by the
beneficiary, whichever is lower.
10) Kotak Institutional Equities in a
note said that the scheme will give a boost to the housing sector
provided real estate players offer compact products at lower ticket
sizes. This scheme will help bring down overall interest cost for home
loan borrowers, the brokerage added.
Source: NDTV
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