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The Centre’s credit-linked interest subsidy scheme for housing loans taken by people in mid-income groups has been made effective from January 1 with EMIs to go down by over Rs. 2,000 per month.

Prime Minister Narendra Modi had on 31 December last year announced the Credit Linked Subsidy Scheme for Middle Income Groups —CLSS(MIG). Under the scheme, an interest subsidy of 4% on housing loans of up to Rs 9 lakh for those with an income of Rs 12 lakh per year and of 3% on housing loans of up to Rs 12 lakh for those having an income of Rs 18 lakh per year will be given.

In the guidelines, the tenure of loan has been capped at 20 years. The total interest subsidy accruing on these loans amounts will be paid to the beneficiaries up front, thus reducing the burden of Equated Monthly Instalment (EMI). The total interest subsidy to be paid to MIG appliants on a ₹9-lakh loan comes to ₹2.35 lakh and on a loan of ₹12 lakh, it comes to ₹2.30 lakh per beneficiary.

Interest subsidy will be provided on loans for construction or acquisition of a house with a carpet area up to 90 sqm by those earning ₹12 lakh per annum. Those earning up to ₹18 lakh per year can avail themselves of the subsidy on a purchase of a house with a carpet area up to 110 sqm.

As many as 70 lending institutions, including 45 Housing Finance Companies and 15 scheduled banks, signed Memoranda of Understanding with National Housing Bank (NHB) today for implementation of CLSS(MIG) component of Pradhan Mantri Awas Yojana (Urban).

Beneficiaries eligible for interest subsidy under CLSS can directly apply to the lending institutions. After verification of applications, the lenders will sanction loans and then claim subsidy from the nodal agencies.

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