EMIs on home loans to shrink if your city or town falls under PMAY

Moneycontrol News

The monthly home loan installment (EMIs) will soon come down by almost Rs 2000 if your first home falls in a city or town under the Pradhan Mantri Awas Yojana (PMAY) and if you fall in the income bracket of Rs 12-18 lakh.

The government has put forth an interest subsidy of 3-4 percent on borrowings of Rs 9-12 lakhs. This is applicable even if the original loan amount is higher.

Under the scheme, government has divided subsidy for two groups - one with income between Rs 6,00,00-12,00,000 and the other with income between Rs 12,00,00-18,00,000. In the first group, an interest subsidy of 4 percent will be available for loan amount of upto Rs 9 lakh and in the second, a 3 percent subsidy will be available for loans of upto Rs 18 lakh.

Housing loans above Rs 9 lakh and Rs 12 lakh will be at non-subsidized rates.

The tenure of the loan is capped at 20 years. The total interest subsidy accruing on these loans will be paid to the beneficiaries upfront, which in tune will reduce the equated monthly installments (EMI) burden.

The subsidy falls under the new Credit Linked Subsidy Scheme for Middle Income Groups by the Minister for Housing and Urban Poverty Alleviation.

Also, the interest subsidy will be provided on loans for construction or acquisition of house with a carpet area of up to 90 square metres for those earning Rs 12 lakh per annum. For people earning Rs 18 lakh a year, subsidy is available for house with carpet area of up to 110 square metres.

Loans availed from January onward are entitled for the subsidy, which was announced by PM Modi as a part of the post-demonetisation package.
Minister for Housing and Urban Poverty Alleviation M Venkaiah Naidu said the subsidy for affordable housing will boost the real estate sector and help in employment generation too.

The government has appointed National Housing Board and Housing and Urban Development Corporation (HUDCO) as central nodal agencies for implementation of the scheme.

On Wednesday, close to 70 lending institutions and 45 housing finance companies alongwith scheduled and regional banks have signed Memorandum of Understanding (MoUs) with the National Housing Bank for same.