Gear up for Home Loans with Subsidy from the Government

Arwind Sharma By Arwind Sharma, 28th Apr 2017 | Follow this author | RSS Feed
Posted in Wikinut>Business>Investment

Looking to get Home Loans? The NHB has a scheme where you can get a Government subsidy worth 3 percent of the interest value.


The government is committed to ensuring that all families have housing by the end of 2022. The subvention of interest shouldn’t just decrease the Home Loan EMI burden on these families. It also aims to expand or reconstruct present homes as stated by Narendra Singh Tomar, the current Rural Development Minister. The scheme also helps create employment opportunities for youth in the rural housing sector.

Housing for Everyone

The scheme has been approved at the end of January. During this time, the Government aimed to build about 44 lakh houses. The National Housing Bank plans to implement the scheme. The Government subsidy would cover 3 percent of the net present interest value.

The National Housing Bank would pass the amount to different lending institutions across the country. This includes commercial banks and private institutions as well. The government also plans to take measures for convergence with the Pradhan Mantri Awas Yojana. This can include technical assistance to all beneficiaries through present regulations.

How the Lower Sections of Society Benefit

The government has been trying to accommodate the poor section of society. This has directed authorities to launch the Pradhan Mantri Awas Yojana along with a host of subsidies on Home Loan interest rates.
The Housing for All is one of the most critical subsidy slabs that’s fueled the real estate industry in the country. The schemes are also applicable to the loans with a tenure of 20 years, as opposed to the previous limit of 15 years.

It was previously applicable to those earning not more than Rs.6 lakhs. Now, anyone can get the privileges based on the income group they fall under. The best part is that this Government subsidy is additional to the income tax deductions on Home Loans.

Those who have annual earnings below Rs.6 lakh are eligible to receive an allowance. This means that if you’ve borrowed a sum as property loan, you’ll only have to pay 2.5% of Rs. 6 lakh along with 9% on the remainder of the loan. When it comes to the second income bracket, which allows individuals to earn Rs.12 lakh per annum, you’d get an interest subsidy of 4% on the principal of Rs. 9 lakh. There’s a Government subsidy of 3% on the principal part of Rs.12 lakh. It suggests that if you’re earning Rs 18 lakh a year, you’ll receive a deduction of Rs.2.4 lakhs for your first house.

The actual benefit for all these income groups is about Rs. 2.4 lakh. The Home Loan interest rate is calculated at 9%. Under this scheme, the Home Loan EMI has decreased by Rs.2,200.

The HUDCO and the National Housing Bank are the two main agencies that are working to implement these schemes. The government has offered a subsidy of Rs. 310 crore to 18,000 home aspirants who want to buy their first home and fall in the low income group. Financial experts are hopeful about the disbursal rate. They’re sure it’ll be available to middle-income groups in the near future.


Home Loan, Interst Rate, Loan, Personal Finance, Pradhan Mantri Awas Yojana

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author avatar Arwind Sharma
Arwind Sharma a passionate writer on finance and closely associated with financial companies. He is still busy in discovering time-efficient finance schemes. To know more about Loan against

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