Before 2015, middle-income Indian families had to face immense financial strain when availing of a home loan. However, after the launch of the Credit Linked Subsidy Scheme (CLSS), borrowers do not need to face the same issue. CLSS allows middle-income groups to avail of home loans at discounted interest rates under Pradhan Mantri Awas Yojana (PMAY). The same component offers home loans at discounted rates to lower-income groups (LIG) and economically weaker sections (EWS).
The Government of India launched the PMAY scheme in 2015 to help the financially backward people living in urban areas to purchase affordable housing. This Credit Linked Subsidy Scheme is a central scheme under the Pradhan Mantri Awas Yojana. Under this scheme, the Indian Government provides interest subsidies to financially disadvantaged people when they take out a home loan. Moreover, the interest subsidy is credited to beneficiaries’ loan accounts via primary lending institutions. As a result, beneficiaries get access to effective housing loans with a reduced EMI.
The key features of CLSS are:
To avail of CLSS benefits, borrowers must come under one of the following income groups:
|Income Groups||Minimum Yearly Income||Maximum Yearly Income|
|Lower Income Group||Rs. 3 lakh||Rs. 6 lakh|
|Middle Income Group I||Rs. 6 lakh||Rs. 12 lakh|
|Middle Income Group II||Rs. 12 lakh||Rs. 18 lakh|
Additionally, the annual household income for EWS must not exceed Rs.3 lakh.
CLSS scheme eligibility also rests on the following factors:
The guidelines mentioned for the PMAY CLSS scheme are as follows:
While CLSS is available to EWS, LIG and MIG, the terms differ considerably for each group. After knowing CLSS eligibility, make sure you go through the terms for different income groups.
Here are the specific terms for lower-income group applicants under PMAY CLSS:
A similar set of terms are applicable to economically weaker section borrowers. These are as follows:
The maximum loan amount eligible for subsidy in the case of borrowers belonging to LIG and EWS categories is Rs.6 lakh.
As stated previously, the home loan interest subsidy scheme is available to both classes under the middle-income group.
Here are the terms and conditions for middle-income group I beneficiaries under CLSS:
For MIG-II, the following terms are applicable –
Keep in mind that the maximum tenure under PMAY CLSS is 20 years, regardless of your income group.
To understand the calculation, consider this example:
Suppose you belong to MIG-I and you decide to avail a home loan of Rs.8 lakh. The interest rate is 8.5% and the tenure you choose is 20 years. Under normal circumstances, you would have to pay Rs.6,943 as EMI for this loan.
However, the MIG-I group is eligible for a subsidy amount of Rs.2.35 lakh. Therefore, your loan principal would be Rs.8 lakh – Rs.2.35 lakh, which is Rs.5.65 lakh. Your actual EMI would be based on this new principle of Rs.5.65 lakh. Thus, the EMI would be Rs.4,903.
Besides learning about CLSS, borrowers should also choose their lenders carefully. Navi offers hassle-free home loans of Rs.10 crores, with interest rates starting at 7.93%. You can repay the loan within a tenure of up to 25 years. For more information, download the Navi app.
If you have any doubt regarding CLSS or any of its features, dial one of the following toll-free numbers –
When looking to avail CLSS benefits, you need to follow these steps:
Step 1: Contact a lender offering PMAY-linked home loans.
Step 2: Fill up a CLSS form with relevant details and submit it to the lending institution.
Step 3: Submit necessary documents too.
After this process is complete, the housing loan amount will reach your account soon. Your lender will also begin coordinating with central nodal agencies to disburse your subsidy amount.
The documents required to apply for the PMAY CLSS scheme are:
If you are looking to avail benefits under this scheme, here are some factors to keep in mind:
The Pradhan Mantri Awas Yojana has made affordable housing a reality in India. With attractive subsidies on home loans, more individuals can afford to avail such credit without facing financial hurdles. Still, you should be familiar with all aspects of the CLSS scheme to maximise your benefits from it.
Ans: More than 70 lending institutions have pledged their support for this affordable housing scheme. Additionally, 15 scheduled banks are also affiliated with this program. Individuals can avail of housing loans from any of these institutions to receive CLSS benefits.
Ans: The CLSS scheme does not come with any limitations for the home loan principal amount. Supposing you belong to MIG-II, you will be eligible for subsidised rates on Rs. 12 lakh of your loan amount. For the remaining Rs. 8 lakh, interest is calculated as per the standard rates.
Ans: Yes, a non-resident Indian can avail of PMAY benefits. However, that individual’s annual household income should be less than Rs. 18 lakh. Moreover, a direct family member should not own a pucca house for this NRI to claim a subsidy.
Ans: Existing borrowers can avail of PMAY subsidies on their housing loans, but only under specific conditions. EWS and LIG borrowers with loans sanctioned on or after June 25 2015, can avail of PMAY benefits. On the other hand, only those MIG borrowers who availed of a loan on or after January 1 2017 can avail of such benefits.
Ans: Borrowers can choose home loan tenure as per their convenience and still claim CLSS benefits. However, lenders will calculate subsidies until the 20th year only. After that, a borrower would need to bear standard interest and EMI payments without the subsidies.
Ans: The loan limit under the PMAY CLSS scheme is stated below:
EWS- up to Rs 6 lakh
LIG- up to Rs 9 lakh
MIG I- up to Rs 12 lakh
MIG II- up to Rs 18 lakh
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Disclaimer: This article has been prepared on the basis of internal data, publicly available information and other sources believed to be reliable. The information contained in this article is for general purposes only and not a complete disclosure of every material fact. It should not be construed as investment advice to any party. The article does not warrant the completeness or accuracy of the information, and disclaims all liabilities, losses and damages arising out of the use of this information. Readers shall be fully liable/responsible for any decision taken on the basis of this article.
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