For boosting real estate sales volumes, the Government has already extended the CLSS (credit-linked subsidy scheme) on home loans under the Pradhan Mantri Awas Yojana for mid-income customers to the 31st of March, 2019. This will be a big boon for first-time buyers with annual incomes between Rs.6-18 lakh annually and interest payouts up to Rs.2.35 lakh can be saved on loans with 20 year tenors.
This loan is available solely for the first house that someone purchases and the home that is purchased should not exceed 60 sq meters or approximately 643 sq. ft. for household income going up to Rs.6 lakh annually. This is 965 sq. ft. or 90 sq meters (carpet area) for those earning between Rs.6-12 lakh annually. For those earning between Rs.12-18 lakh annually, the maximum size should be 120 sq meters or roughly 1,287 sq. ft. The annual family income will include the annual incomes of husband, wife and unmarried sons and daughters. Those in the MIG category earning between Rs.6-12 lakh will receive interest subsidies to the tune of 4% for loans up to Rs.9 lakh. Those earning between Rs.12-18 lakh will receive 3% as an interest subsidy on loans up to Rs.12 lakh. The Government has also scaled up the loan tenor for the EWS and LIG categories to 20 years from 15 years.
The total interest subsidy under the MIG category for loans up to Rs.9 lakh works out to Rs.2.44 lakh. This comes to Rs.2.48 lakh for each beneficiary on a loan up to Rs.12 lakh. The total interest subsidy will be disbursed by the bank to the beneficiaries and this will lower the burden of borrowers. The maximum loan tenor will be 20 years. 4% is the interest subsidy for MIG borrowers under the CLSS scheme and this will lower EMIs by approximately Rs.2,062 each month on loans of Rs.9 lakh and 3% will be the interest subsidy on a Rs.12 lakh loan, which will lower EMIs by approximately Rs.2,019, assuming present interest rates are 8.5%.
Banks will deposit this amount in the bank account of the borrower upfront and this will also contribute towards lowering the loan burden of the customer. The borrower will pay interest on the lowered amount of the loan and this will lessen the EMI burden as well. The CLSS was launched with the aim of Housing for All by 2020.