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Government offers subsidy on Interest for home loans with income Rs 6 Lakh to Rs 18 lakh

Good news for all home loan applicants. The government of India has announced a subsidy on Interest up to 2.25 percent on home loans. This subsidy is only applicable for the applicants with an annual income of Rs 6 Lakh to Rs 18 lakh per annum. This subsidy will be issued under Credit Linked Subsidy Scheme for Middle Income Groups (CLSS-MIG) initiated by Ministry of Housing and Urban Poverty Alleviation.

PM Modi has already announced subsidy interest on housing and home loans for 4 per cent. The subsidy is eligible for loans not exceeding Rs 9 lakh for applicants with annual income less than Rs 12 lakh. Also, PM has announced 3 per cent subsidy on housing loans up to ₹12 lakh for those with income up to ₹18 lakh per year.

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“Those who have been sanctioned housing loans and whose applications are under consideration since January 1 this year are also eligible for interest subsidy. Large scale incentivisation of affordable housing will boost real estate sector, resulting in employment generation as well,” says Venkaiah Naidu.

The guidelines state that the loan tenure has been capped at 20 years. The total interest subsidy building up on these loans will be paid to the beneficiaries which reduce the EMI.

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The total interest subsidy for MIG applicants on a loan of Rs 12 lakh comes Rs 2.30 lakh per beneficiary. And on a Rs 9-lakh loan, it comes to Rs 2.35 lakh per beneficiary. Interest subsidy will be issued on loans for acquisition or construction of a house with a carpet area up to 90 sqm and with earning Rs 12 lakh per annum. Applicants with earning up to Rs 18 lakh per year can avail the subsidy on the house with a carpet area up to 110 sqm.

Housing and Urban Development Corporation (HUDCO) and National Housing Board (NHB) have been designated as Central Nodal Agencies for implementing CLSS. The lenders will sanction loans after verification of applications and then claim the subsidy from the nodal agencies. Eligible beneficiaries under CLSS can apply directly to the lending institutions.

RBI cuts Repo rate by 25 bps to bring down inflation

RBI cuts Repo rate

RBI cuts Repo Rate by 6.25%: Amidst of slow growth rate and high inflation, to bring down the situation under the standards, Reserve Bank of India has announced some measures related to the nation’s economy. A surprising step by RBI has however brought a positive impact on share market immediately.

The rupee also gained strength and stood at 6.40 against the dollar. The decision to cut down the Repo by 0.25% is the biggest and sudden surprise before the festival.Reserve Bank of India Governor, Urjit Patel at a news conference in Mumbai has announced the rate cut.

What is REPO rate?

Repo rate is the rate of interest at which the banks in India borrow from the RBI whereas the Cash Reserve Ratio (CRR) remains unchanged. CRR refers to the amount parked mandatorily with the RBI. Six-member panel in the RBI has taken the unanimous decision to cut the rate.Repo rate cut is directly related to the loaning interest rate to customers.

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The lending rates are also to be cut down following this impact. At present, the repo rate stands at 6.25% after the decline from 6.50%. The present rate is the six years lowest figure.

The loans are at present stand between 9% – 9.5% for customers. Home and vehicle loans will now become cheaper. The Every Month Installment (EMI) will also come down as the interest rates have been lowered.

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Present and future interest are anyways will be effective as per the rate announced by the banks after the repo rate decrease. The previous loans can also be revived and opted by the consumers based on the calculations of the bank.

For the past one and half year that is from January 2015, RBI has cut down the Repo rate six times to control the inflation growth in India. Food inflation is the key factor. Future analysis of Gross Domestic Products (GDP) is also dependent on the Repo rate. Hence to have a flourishing economy, RBI is taking all the measures possible.