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How To Get A Subsidy On Your Home Loan?

IndianMoney.com Research Team | Updated On Wednesday, June 27,2018, 12:15 PM

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How To Get A Subsidy On Your Home Loan?

 

 

 

You have shortlisted a property and decided to buy a dream home. All you need to do is finalize the bank in which you will avail a home loan. There’s something interesting. Can you get a subsidy on the interest in your home loan?

Yes, under the Pradhan Mantri Awas Yojana, you can get a subsidy on the interest rate on your home loan. To enjoy this subsidy, you or family members must not own a pucca house in any part of India. But, if you are staying with parents in a house owned by them, you can enjoy the subsidy under PMAY.

Pradhan Mantri Awas Yojana (PMAY), is a scheme run by the Government to ensure “Housing For All by 2022.” You have a Credit Linked Subsidy Scheme (CLSS), where you get an interest subsidy on properties bought in the urban market if you belong to the Economically Weak Section (EWS), Low Income Group (LIG) and the Middle Income Group (MIG 1&2).

How can you get the interest subsidy under PMAY? Let’s find out. Want to know more on Home Loans? We at IndianMoney.com will make it easy for you. Just give us a missed call on 022 6181 6111 to explore our unique Free Advisory Service. IndianMoney.com is not a seller of any financial products. We only provide FREE financial advice/education to ensure that you are not misguided while buying any kind of financial products.

 

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How To Get A Subsidy On Your Home Loan?

 

How much subsidy can you get on the home loan? You can get a subsidy of 3 - 6.5% on the interest if you avail a home loan of around Rs 6-12 Lakhs.

 

Take a look at this table to understand which category you belong:

 

 

  • If your/household income is up to Rs 6 Lakhs, you can get a maximum subsidy of Rs 2.67 Lakhs.
  • If your/household income is up to Rs 12 Lakhs, you can get a maximum subsidy of Rs 2.35 Lakhs.
  • If your/household income is up to Rs 18 Lakhs, you can get a maximum subsidy of Rs 2.30 Lakhs.

 

SEE ALSO: 9 Reasons Why Your Home Loan Gets Rejected

 

How much subsidy can you get under PMAY?


 

You enjoy a subsidy under this scheme in the form of an upfront relief as a reduction in the overall loan liability. In case of EWS/LIG, the present value of the interest subsidy is calculated at 6.5% on the maximum loan amount of Rs 6 Lakhs of tenure 20 years. You will get a figure of Rs 2.67 Lakhs.

The amount of original loan is then reduced by the NPV (Net Present Value) of the subsidy benefit, and your liability and EMI is computed depending on the rate of interest agreed with the bank.

If you borrow more than Rs 6 lakhs, the maximum amount of the subsidy is still restricted to Rs 6 Lakhs and the additional loan over and above Rs 6 Lakhs is charged at regular home loan rates of the bank.

Remember: Lenders/Banks register themselves with NHB or HUDCO to offer the PMAY. You will be given a lump sum of Rs 3,000 to cover the cost of processing the home loan application for an amount up to Rs 6 Lakhs. If you avail a home loan beyond Rs 6 Lakhs, the bank will recover the amounts towards the normal processing fee.

 

Be Wise, Get Rich.

 

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IndianMoney.com Research Team

The research team at IndianMoney.com comprises of certified and experienced professionals who share the company's vision to make every Indian financially literate by equipping every Indian with right and unbiased advice. IndianMoney.com research team provides newsletters, articles, videos and FAQs on various financial products and concepts only to help you make wise financial decisions.

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