Business & Finance

Know How to Reduce Your Loan EMI with Credit-Linked Subsidy Scheme

The escalated demand for real estate properties is well complemented by the growth of the corporate sectors and increasing requirements of semi-urban and urban accommodations, and office spaces. In an attempt to boost affordability and accessibility of housing options, multiple flagships programs have been launched that subsidizes the rate of interest on home loans. It includes PMAY and its component credit-linked subsidy scheme.

What is PMAY CLSS?

Taking into consideration the requirement to make housing an affordable option for all, the Government of India launched a scheme – Pradhan Mantri Awas Yojana. It aims to help the financially deprived sections of the population purchase a residential property and upgrade their living standards. With the motto to make ‘housing for all’ a possibility, the scheme provides potential borrowers of home loans with an option to subsidies their rates of interest on these advances. It makes housing further affordable.

Additionally, with the introduction of credit linked subsidy scheme, a component of Pradhan Mantri Awas Yojana 2019, both Low Income and Middle Income Groups can avail benefits of this scheme. It includes lowering the monthly installment of your availed housing finance, which ultimately reduces the cost of the loan.

How does CLSS help reduce your home loan EMI?

While availing home loans help individuals bridge the widening financial gap to purchasing a residential property, they require borrowers to mortgage a property. This property needs to be in the serviceable range of a lender and in good condition to fetch the highest possible Loan To Value.

Under such circumstances, NBFCs in question have the reassurance of repayment via liquation of a mortgaged asset in case of defaults. Therefore they are lenient about the required eligibility criteria. In addition to this, they also keep a lower spread over their MCLR and hence charge a comparatively lower home loan interest rate. It is exceptionally beneficial as it reduces the home loan EMI that one needs to pay and consequently lowers the overall cost of credit.

Now, considering that borrowers of these secured advances apply for and avail the PMAY or PMAY credit linked subsidy scheme benefits, this rate of interest is further reduced and hence makes the repayment structure further convenient. This is how PMAY eases your way to becoming a homeowner.

All that they need to do is follow the following application process –

Step 1: Select a lender offering financial assistance in accordance with the PMAY scheme and avail their Home Loan. It ensures that you get the benefit of a furthered lower rate of interest along with add-on benefits of –

  • High-value credit amount of up to Rs. 3.5 Crore.
  • Flexible repayment tenor.
  • Balance transfer facility.
  • Top up loan.

Step 2: Fill in the subsidy application form, and submit it with the relevant documents.

Step 3: Await document verification and a response from the lender regarding disbursal.

Following this, the NBFC will approach the nodal agency, and soon your bank account will be injected with Pradhan Mantri Awas Yojana loan subsidy that you are found eligible for.

  • Eligibility criteria of PMAY CLSS

Ministry of Housing And Urban Poverty Alleviation has provided the following PMAY eligibility for all potential applicants that one needs to meet to avail the benefit of the subsidy. Know the PMAY eligibility criteria here and apply for the same –

Medium Income Group (MIG2)

  • Annual income: Rs. 12 Lakh to Rs. 18 Lakh.
  • Loan cap: Rs.12 Lakh.
  • Interest subsidy: up to 3%.
  • House size: 200 square meters.

Medium Income Group (MIG1)

  • Annual income: below Rs. 12 Lakh.
  • Loan cap: Rs. 9 Lakh.
  • Interest subsidy: Up to 4%.
  • House size: 160 square meters.

Light Income Group (LIG)

  • Annual income: Rs. 3 Lakh to Rs. 6 Lakh.
  • Loan cap: Rs. 2.2 Lakh.
  • Interest subsidy: up to 6.50%.
  • House size: 60 square meters.

Economically Weaker Section (EWS)

  • Annual income: less than Rs. 3 Lakh.
  • Loan cap: Rs. 2.2 Lakh.
  • Interest subsidy: up to 6.50%.
  • House size: 30 square meters.

Make sure to approach lenders who offer home loan in compliance with the PMAY CLSS and compare before you settle upon one. It ensures that you get the maximum benefits from your advance.