How to Get a Subsidy on Home Loan? Eligibility and Conditions!
With an object of giving a push to Housing For All Missions by 2022, the Govt. of India through its Ministry of Housing and Urban Poverty Alleviation has announced a scheme of Interest Rate subvention of 6.50% p.a. for Lower and Economically Weaker section to help them to purchase / renovate or improvement of a new / existing pucca house (“concrete”). The Scheme is calls Credit Link Credit Subsidy Scheme and is titled as Pradhan Mantri Awas Youjna (PM). The Scheme covers all statutory towns as per Census 2011 and further towns as notified subsequently, including planning area notified with respect to statutory town.
As such it is important to note that the scheme is not available in Rural Areas.
The Scheme was first brought into force on 25th June 2015. Further, with effect from 01st Jan 2017, the benefits under the scheme has been extended for one year (Up to 31st December, 2017) to certain class of MIG family (Differently classified under two category depending upon their household income) and interest subvention of 4% and 3% respectively depending on the property area and their household income as tabulated below.
|Borrower Type||Maximum Household Income Ceiling
|Max Carpet Area-(sqm)||Interest subvention (%)||Maximum Loan Amount Eligible for Intt. sub-vention||Purpose of Loan||Max Benefits|
|EWS and LIG||Up to Rs. 6,00,000||60 sqm||6.50 %||Rs 6 lacs||Purchase/Self Construction/Extension||2.67 Lacs|
|MIG-1||Rs. 6,00,001 to Rs. 12,00,000||120 sqm||4.00 %||Rs. 9 lacs||Purchase/Self Construction||2.35 Lacs|
|MIG-2||Rs. 12,00,001 to Rs. 18,00,000||150 sqm||3.00 %||Rs. 12 lacs||Purchase/Self Construction||2.30 Lacs|
- It may be note that in case of EWS and LIG category, the scheme also allows the loan purpose for extension and improvement in their existing home while in case of both MIG-1 and MIG-2, the scheme only covers Purchase and Construction of New House only.
- In case of EWS and LIG category, the scheme benefits are available up to 31st March 2022 while in case of MIG-1 and MIG-2, the scheme benefits are available up to 31st December 2017. (i.e. for a period of one year)
- In case of EWS & LIG income group, there should be a woman as an owner or co-owner of the property except in the case of self-construction / extension in the existing property.
The Interest Rate subvention in all cases is available on the portion of the loan amount sanction by the bank and last with the validity period of the loan but not exceeding 20 years. It is important to note that the scheme only benefits the family which does not own a pucca house in any part of India. The family comprises of husband, wife and unmarried children.
Common Conditions under the Scheme for both EWS, LIG and MIG Income Group
- The Family (Husband, Wife, and Minor Children) should not possess any pucca house in any part of India in their own name earlier. Therefore, it is for facilitating the first house of the applicant beneficiary only.
- It is mandatory to avail a loan from the banks to avail the scheme benefits. There is no automatic approval of the loan by the banks under the scheme. The loan amount and eligibility is subject to the norms of the respective banks.
- There is no bar on the maximum Value of the Property and Loan Account. However, the benefits under the scheme are limit to above and up to area limits and loan amount specified above.
Procedure for Subsidy Release by the Govt. of India
The Govt. has appointed 2 Nodal Agency viz HUDCO (Housing & Urban Development Corporation) and NHB (National Housing Board) for monitoring the operations of the scheme and release of subsidy claims by the banks.
Based on the approval of the loan. The lender approaches the NHB/ HUDCO for the release of upfront capital subsidy contribution. On receipt of such amount, the subsidy amount is the credit to the loan amount of the borrower. This amount is used for downsizing the EMI installments of the borrower without changing the original tenor of the loan. It’s important to note that subsidy receipt is not released to the borrower upfront. It is adjusted in the loan amount through a proportionate reduction in his liability payments. In case, the borrower prepays the loan amount earlier than his scheduled installments. He will only be entitled to claim the subsidy benefits only during the tenor of the actual loan period. The unclaimed subsidy amount in such case shall be refunded back by the lender to the NHB / Hudco as the case may be.
The full details of the scheme is available on the website of Ministry of Urban and Poverty Alleviation (MUPA) at http://moud.gov.in/upload/uploadfiles/files/10_02A_CLSS_MIG_leaflet_English.pdf