Thanks to our Government for Bringing “Ache Din” for Middle-Class Home Buyers
May 22, 2017 Home Trading Steps
Prime Minister Narendra Modi in his address to the nation on New Year’s Eve made a significant announcement for India’s middle-class home buyers.
He announced that now people with an annual income of up to Rs 12 lakh in urban areas would be eligible for a four per cent subsidy in interest for a home loan up to Rs 9 lakh. People who are earning Rs 18 lakh annually, on the other hand, will enjoy a three per cent rebate on home loans of up to Rs 12 lakh. He has also given hints on releasing of the entire interest subsidy amount upfront which would help buyers make the down-payment. Media reports have also informed that the Centre will be spending Rs 1,000 crore for the interest subsidy. However, further details of the plan have not yet been revealed.
The most commendable aspect of this announcement by the Prime Minister is that in India most of the schemes providing easy access to government funds have been largely focussed on the poor. But this scheme is different. For the first time, India’s middle class will also be able to get easy access to funds. Even in present times, the government provides a 6.5 per cent interest subsidy to those earning up to Rs 6 lakh and paying housing loans of up to Rs 6 lakh. But this sum of money is too small to invest in property in major cities. For this reason, only 20,000 people have availed of the loans under this scheme so far. But as the cover is being extended, it is expected that the new scheme will see more people investing in property.
Under the new scheme, if you apply for a home loan worth Rs 40 lakh while your annual income is below Rs 18 lakh, you will be able to enjoy the interest rate rebate on the loan amount of Rs 12 lakh. But you will have to pay back the remaining amount at a normal interest rate at which your bank offers home loans. And this would reduce the cost of making your house to a great extent.
However, in order to be eligible to avail this scheme, you have to fulfil the following conditions:
A fresh loan has to be applied by you under the Pradhan Mantri Awas Yojna (PMAY) to avail of the benefits under the scheme.
If you have availed a home loan earlier, this scheme will not be applicable.
An applicant will not be eligible for this scheme if he has another house somewhere else. It has been commonly noticed that people who migrate to bigger cities often own houses in smaller ones. Although, this segment of the population who have migrated into big cities, consists of a large chunk of home buyers, but unfortunately these people will not be able to avail of the benefits of the new scheme. Nevertheless, it is expected that some relaxations in this regard would eventually take place which would in a way, improve the overall health of the sector.
But for the time being, some of the above mentioned eligibility criteria might pose to be a deterrent.
He announced that now people with an annual income of up to Rs 12 lakh in urban areas would be eligible for a four per cent subsidy in interest for a home loan up to Rs 9 lakh. People who are earning Rs 18 lakh annually, on the other hand, will enjoy a three per cent rebate on home loans of up to Rs 12 lakh. He has also given hints on releasing of the entire interest subsidy amount upfront which would help buyers make the down-payment. Media reports have also informed that the Centre will be spending Rs 1,000 crore for the interest subsidy. However, further details of the plan have not yet been revealed.
The most commendable aspect of this announcement by the Prime Minister is that in India most of the schemes providing easy access to government funds have been largely focussed on the poor. But this scheme is different. For the first time, India’s middle class will also be able to get easy access to funds. Even in present times, the government provides a 6.5 per cent interest subsidy to those earning up to Rs 6 lakh and paying housing loans of up to Rs 6 lakh. But this sum of money is too small to invest in property in major cities. For this reason, only 20,000 people have availed of the loans under this scheme so far. But as the cover is being extended, it is expected that the new scheme will see more people investing in property.
Under the new scheme, if you apply for a home loan worth Rs 40 lakh while your annual income is below Rs 18 lakh, you will be able to enjoy the interest rate rebate on the loan amount of Rs 12 lakh. But you will have to pay back the remaining amount at a normal interest rate at which your bank offers home loans. And this would reduce the cost of making your house to a great extent.
However, in order to be eligible to avail this scheme, you have to fulfil the following conditions:
A fresh loan has to be applied by you under the Pradhan Mantri Awas Yojna (PMAY) to avail of the benefits under the scheme.
If you have availed a home loan earlier, this scheme will not be applicable.
An applicant will not be eligible for this scheme if he has another house somewhere else. It has been commonly noticed that people who migrate to bigger cities often own houses in smaller ones. Although, this segment of the population who have migrated into big cities, consists of a large chunk of home buyers, but unfortunately these people will not be able to avail of the benefits of the new scheme. Nevertheless, it is expected that some relaxations in this regard would eventually take place which would in a way, improve the overall health of the sector.
But for the time being, some of the above mentioned eligibility criteria might pose to be a deterrent.
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