Undoubtedly, the home loan market is abuzz with the rollout of the Pradhan Mantri Awas Yojana (PMAY), which is envisaged to house every single citizen of India as per the flagship housing program, Housing for All by 2022.
PMAY, as I speak of, has three components-CLSS LIG Scheme, CLSS MIG-I Scheme and CLSS MIG-II Scheme, segregated according to income groups of ₹3 lakhs-6 lakhs, over ₹6 lakhs-12 lakhs and over ₹12 lakhs-18 lakhs, respectively.
In all these schemes, the common word is CLSS, which stands for Credit Linked Subsidy Scheme. This clearly means the availability of subsidy on a home loan. Before the rollout of such a scheme, the lower income households were way off from taking their feet to the dream home. But post its launch, the possibility of them buying their dream possession has enhanced immensely. So, why not get into the mathematical side of things to check out the affordability that the scheme brings to these households?
CLSS has an interest subsidy that is set to appeal the low-income groups in a big way. An interest saving of ₹5 lakhs and more and a reduction of EMI by over 2,000 are the gifts of CLSS LIG scheme. Let’s see how the subsidy works out to put such giant saving figures.
A subsidy of 6.5% is allowed on their home loan for an amount as much as ₹6 lakhs. The remaining loan, if any, will be charged at the normal rate of interest. Sounds interesting, isn’t it?
If we check the existing rate of interest across banks, they can be anywhere between 8.35%-9.50% per annum. So, if you fall under ₹3 lakhs-6 lakhs income bracket and find a lender offering PMAY-backed loan having its normal interest rate at 8.50% per annum, what would happen to the EMI and interest outgo?
Just in case, you applied for a loan of ₹15 lakhs for a 20-year tenure, the first ₹6 lakhs will be serviced at 2% (8.50%-6.50%) while the next ₹9 lakhs at 8.50%. The EMI and interest would thus be ₹10,845 and ₹11,02,970, respectively.
In case you do not avail the subsidy, you would need to pay an EMI and interest of ₹13,017 and ₹16,24,164, respectively, over the course of 20 years. So, there you have, a lower EMI of ₹2,172 (13,017-10,845) and interest of ₹5,21,194 (16,24,164-11,02,970) with CLSS LIG scheme.
There are certain operational guidelines which you should be aware of before applying for CLSS LIG scheme. Want to check out those? Take a look at the pointers below.
The beneficiary must not own a pucca house in his/her name or any member of the family anywhere across India.
The subsidy is available for those looking to buy their first home.
Husband, wife and unmarried children can become the part of the beneficiary family.
The carpet area of a home to be purchased and constructed should be a maximum of 30 square meters. The area is not inclusive of the wall thickness.
You can either buy an all weather single unit or a multi-storeyed building within the said carpet area.
Both central and state nodal agencies are entrusted to implement the scheme at various locations across the country.
Almost 70 lending institutions comprising both public & private sector banks, housing finance companies, regional rural banks, small finance banks and others are offering PMAY-backed home loans. These institutions have inked a memorandum of understanding with National Housing Bank for the implementation of the scheme. Almost every public sector bank is part of the scheme.
As you are now updated with the benefits and guidelines relating to CLSS LIG scheme, you can take a right call and ensure your home loan experience remains a great one for your wallet as well as for your family.
Stories by Anvi Sharma