Interest subsidy on housing loan applicable from January 1, 2017

Anyone who has applied and got a home loan sanctioned after January 1 and has less than Rs 18 lakh annual income, will be eligible for interest subsidy of 3-4%. Prime Minister Narendra Modi had announced the interest subsidy on December 31, though the annual income criteria was not announced.

This benefit interest subsidy can also be availed by unmarried and earning young adults for acquisition/ construction of a new house including repurchase. Moreover, flats measuring up to 960 sq ft and 1,184 sq ft will be eligible for 3% and 4% interest subsidy respectively for the specified income group.

TOI on January 4 had first reported that the housing ministry had moved a proposal to provide 4% rebate on interest rate for loans up to Rs 9 lakh and this can be availed by those who earn up to Rs 12 lakh annually in urban areas. Similarly, people earning up to Rs 18 lakh annually will be eligible to avail 3% rebate on interest for loans up to Rs 12 lakh.

Sources in housing finance sector said that though the government had finalised the policy, it has not yet announced it because of election code of conduct. In fact, the ministry had held a meeting with banks and housing finance companies where the operational guidelines for "credit linked subsidy scheme for middle-income groups (CLSS-MIG)" was discussed.

The rebate in interest rate is likely to push housing demand in urban areas and thereby help the sector to revive.