Great beneficial time for housing loan pursuers
Posted on: 13/Apr/2017 12:56:13 PM
It is a great beneficial time indeed for the individuals taking or pursuing housing loans. The banks have reduced their interest rate from 1 to 1.20 percent in the last 1 or 2 years.
Interest subsidy:
This has enabled the EMI to come down. Further, the Credit Linked Subsidy Scheme (CLSS) has announced more concessions for those who avail housing loans. These concessions are effective from 1st January. Eligible customers can avail a maximum subsidy of Rs. 2.30 Lakhs.
The concessions have been announced mainly considering the Middle Income Group. There are 2 sections in this concessional scheme. In the 1st section, a subsidy of 4 percent interest amount is offered for housing loans taken under Rs. 9 Lakhs. In the 2nd section, a 3 percent interest subsidy is given for housing loans taken under Rs. 12 Lakhs.
With this subsidy scheme, a maximum amount of Rs. 2.35 Lakhs can be availed. However, please note that there is no interest subsidy scheme for housing loans of more than Rs. 12 Lakhs.
The procedure:
The customers who have availed housing loans after approval will have to submit an application to NHB (National Housing Bank) which has been authorised to offer the interest subsidy.
In case the customer is found eligible, approval will be sanctioned under CLSS scheme and the amount will be credited to the bank savings account of the customer.
Once this amount is sanctioned, this amount can be deducted from the original housing loan principal amount and the interest needs to be paid only for the balance amount.
Consider taking a housing loan of Rs. 12 Lakhs. Most of the banks offer housing loan under 8.65 percent interest. The EMI will be Rs. 10528. If the concession is given under CLSS scheme, an amount of Rs. 2.30 Lakhs will be deducted from the principal amount. So, the EMI will come down by Rs. 2000 and will become Rs. 8508 from the initial EMI of Rs. 10528. Please note that a time period of 2 or 3 months will be taken to process and get this interest subsidy.
Condition:
There are certain conditions for availing this benefit. There are limits on the loan amount as well as the area (house area measurements) of the house.
In the 1st section concession, the house perimeter should be 90 sq. metre.
In the 2nd section concession, the area should be about/under 110 sq. metre.
The loan amount also should be within the set limits. This concession is available for a specific loan amount. It cannot be availed for higher amounts.
For a housing loan of Rs. 20 Lakhs, a subsidy of Rs. 2.30 lakhs can be availed. Without the subsidy, for a housing loan of Rs. 20 Lakhs, EMI would be Rs. 17547. After the subsidy, EMI will be down to Rs. 15527.
Presently, the system would be valid only until 31st December. The house must be constructed before the end of this year. If no, no subsidy will be given. Also, there is no assurance about how long this scheme would be available. The ideal cases for availing these concessions may be to buy houses which had already been constructed.
Tax concessions:
However, the tax exemption given on the interest will be given only to the net interest paid. It may be noted that there is no tax concession for the amount given as subsidy.
The main point to note is that in the case CLSS scheme is availed, there will be a reduction of Rs. 2.30 Lakhs from the housing loan principal amount.
