Housing Loans Interest Rate Subsidy

Credit Linked Subsidy Scheme (CLSS) is aimed at providing financial benefits to the middle-income and lower-income group. Under the scheme, home loans of up to Rs 9 Lakhs are eligible for a 4% subsidy for those whose annual income is up to Rs 12 Lakh. Housing loans up to Rs 12 Lakhs are eligible for a 3% interest subsidy provided that the borrower’s income is up to Rs 18 Lakhs per annum. The scheme has been made effective from 1^st January 2017, although the guidelines came out later. Home loans sanctioned since Jan 1 will be eligible for the subsidy. However, the applicant earlier should not have a house registered in his name since the scheme is only for first-time homebuyers.

Highlights of Credit Linked Subsidy Scheme

CLSS, sponsored under Pradhan Mantri Awas Yojna (Urban), has come out as a big relief for the mid-segment homebuyers. At the same time, it encourages private builders to launch affordable housing projects in prime locations. Let us look at the key highlights of CLSS-

1. The CLSS is meant for the first-time home buyers, so those who already have a house registered in their name would not be able to get benefits of this scheme.

2. Though the operative guidelines were announced only in March 2017, loans that were sanctioned and are in process since 1^st January 2017 will also be considered.

3. To get benefits under CLSS, beneficiaries will have to apply for the same with their lenders.

4. All commercial banks, regional rural banks, housing finance companies, urban and rural cooperative banks and other financial institutions giving out housing loan are eligible to provide benefit to their customers under the scheme.

5. The amount of interest subsidy provided will be reimbursed to the lender bank from the National Housing Bank (NHB) and the Housing and Urban Development Corporation (HUDCO).

Process of Credit Linked Subsidy Scheme

To understand the process of how to get benefit under Credit Linked Subsidy Scheme, one has to know the following points first-

·      Interest subsidy is provided for the purchase/construction of the house with carpet area of up to 90 square meters for beneficiaries earning up to Rs 12 Lakhs per annum. For those earning between Rs 12 Lakhs and Rs 18 Lakhs, this limit is 110 square meters.

·        The tenure for this loan is taken as 20 years or that preferred by the beneficiary, whichever is lower.

If the beneficiary meets the income and loan eligibility criteria, he/she should apply for the interest subsidy under CLSS with the lender. The lending bank or financial institution will verify the details and if satisfied, it will grant the subsidy. The entire amount of interest subsidy is transferred to the beneficiary’s account in one go and the same amount is reimbursed to the bank from the National Housing Bank or HUDCO.

Extent of EMI Reduction under Credit Linked Subsidy Scheme

To be precise, CLSS reduces the beneficiaries’ EMIs by Rs 2,000 per month.

According to the MD and CEO of National Housing Bank (NHB), an interest subsidy of 4% on a loan of Rs 9 Lakhs will bring down the monthly EMI by Rs 2,062. Similarly, interest subsidy of 3% on a loan of Rs 12 Lakhs will reduce the EMI by Rs 2,019 per month. This calculation has been done with an average interest rate of 8.65%.

About Pradhan Mantri Awas Yojna (PMAY)

Pradhan Mantri Awas Yojna is a scheme catering to the housing needs of mid-income, low-income and economically weaker sections of India. PMAY consists of four important aspects- building homes for slum dwellers, providing financial assistance to homebuyers in the form of credit linked subsidy, providing financial assistance to private developers who wish to develop affordable housing projects and extending direct financial assistance to the EWS.

Credit Linked Subsidy Scheme is a major step towards encouraging people to buy their dream homes and giving an overall boost to the real estate sector.

Home Loans for Under-construction Property

It is no news that real estate prices are high and for a middle-class individual it has become imperative to take home loan to fund the purchase. Since it is a huge financial commitment, you need to make a wise decision about the property you are buying as well as the home loan. With a number of projects coming up at a rapid pace, under-construction homes are rising as a preferred choice among mid-segment buyers. These are priced lower than the ready-to-move homes so you can get the combined benefit of a good location as well as better home at a reasonable rate.

Home loans for under-construction projects are offered by all popular banks and financial institutions. 

Let’s talk about a few such home loans-

ICICI Bank Home Loan

ICICI Bank Home Loan is one such product that helps people own the home of their dreams at attractive interest rates along with easy terms and conditions. ICICI Bank is one of the first tech-savvy banks of the country. One can also apply through their smart phone application and ensure faster approval. They also claim to provide higher eligibility and smart EMI options. One’s eligibility is judged on the basis of various parameters like current age, retirement age, monthly income, existing EMIs, etc. ICICI Bank Home Loan EMIs can also be calculated with the EMI calculator available on their official website. ICICI Bank offers a competitive interest rate along with a maximum tenure of 30 years which will make repayment smoother for the borrowers.

SBI Home Loan

SBI is one of the most preferred home loan lenders of the country. The bank offers home loans for under-construction property, ready-to-move homes and resale homes as well as for construction of a home. The loan amount is decided on the basis of the applicant’s credit history and repayment capacity which is judged by his income, expenses, age, job stability, existing EMIs and a few other things. For properties priced up to Rs 30 Lakhs, 90% of the value can be given as a loan; for properties ranging between 30 Lakhs and 75 Lakhs, the ratio is 80% and for those exceeding Rs 75 Lakhs, the loan percentage is 75%.

Given below are a few benefits of SBI Home Loan-

·         No additional or hidden charges

·         Complete package of exclusive benefits

·         Interest rates charged on a daily reducing balance

·         No prepayment penalties

·         Low processing fees

HDFC Home Loan

Originally a housing finance company, HDFC is also counted among the best home loan lenders. It offers attractive interest rates on home loan that can be taken for the purchase of under-construction property, resale property or for constructing a home on the plot. HDFC also offers loans for extension or renovation of a house. The terms and conditions of HDFC Home Loans are very simple after one meets the eligibility criteria. Both fixed and floating rates of interests are provided on these home loans. Being a smart bank with updated technology, the home loan approval process with HDFC is quick and easy.

Comparative Interest Rates

The table given below shows the home loan interest rates offered by these three lenders to salaried individuals. Take a look-

	Up to Rs 30 Lakhs	30 Lakhs to 75 Lakhs	Above 75 Lakhs
ICICI	8.40%	8.65%	8.70% to 8.80%
HDFC	8.40% to 8.90%	8.50% to 9.00%	8.55% to 9.05%
SBI	8.40%	8.55%	8.70%

Tax Benefits on Home Loans for Under-construction Property

Apart from being cost-effective, investing in under-construction properties through home loans can also give you certain income tax benefits. Under Section 24B, an individual can claim a deduction of Rs 2 Lakhs towards the interest paid on home loan for a self-occupied property. However, if the property is not self-occupied or rented out, there is no maximum limit and the whole interest amount can be claimed for deduction. From financial year 2016-17, more tax benefits are allowed to first-time homebuyers towards interest paid on home loan under section 80EE; the deduction allowed is Rs 50,000 over and above the 2 Lakh limit.

Is IFS code and IFSC code same?

IFS code is known as Indian Financial System code which an alpha-numeric identification code is uniquely allotted by our RBI to the bank’s branch. IFSC code and IFS code is same, they are just written with a difference. Every bank informs you the IFS code of the bank branch by writing it on the passbook and cheque book. Your IFSC code will be unique and different from the IFS code of any other bank’s branch. It is very simple to know your IFS code, in case you do not have your passbook or chequebook handy. You have to visit the RBI’s official website or search for the code by entering the bank and its branch’s name at Google.

The 11 digit alpha-numeric IFS code has first 4 characters as alphabets and last 6 characters as numeric. Our Reserve Bank of India, (RBI) maintains a list of all the IFS codes of the banks and their branches on its online website. RBI is the only authorized body to allot IFS codes to the banks and their branches. All the banks have been strictly asked by RBI to mention their IFS codes on the passbooks and cheque books issued by them. The first page of every passbook will have IFS code mentioned on it and on a cheque book every page has the IFS code mentioned on it. 

Uses of knowing IFS code:

The IFS code helps you to make easy payments and transfers to the bank accounts of your beneficiary. To make any payment through App/ Wallet/ Cheque/ RTGS/ NEFT/ UPI/ IMPS etc you will need to enter the IFS code. Also, to make any transfer through SMS using the MMID code you will have to enter the IFSC code of the beneficiary’s account. The IFS code facilitates direct transfer from your account to the beneficiary’s account. 

How can you search for your IFSC code?

Below are three different ways to know your IFS code:

Search IFSC code online:

To know your IFS code you can just enter the bank’s name along with the branch’s name at the search bar of your Google. Google will show you a list of all the website links that have the information about the codes. Click on any of the links and it will redirect you to the page that has the relevant information. 

Reserve Bank of India’s official website:

You can know the IFS code of your bank from the official RBI’s website. This website has all the relevant information about current policies and any amendments in the policies. Reserve Bank of India has the sole authority to allot IFS codes to the bank branches. Visit the website to know about IFS codes and current policies about banks. 

Passbooks/ Cheque books:

Every bank provides cheque books and passbooks on opening a regular or specialized savings account with the bank. The passbook and the cheque books have the Indian Financial System Code mentioned on the first page and every page respectively. 

Why are IFSC codes unique?

Every IFS code is unique for the bank branches. These codes cannot be duplicated with any other IFS codes. Like, for every individual PAN card number is unique to identify them uniquely, similarly, IFS codes are different for every bank branch. 

How to avoid making errors while entering the IFS codes before making transactions?

Follow the below steps to avoid errors:

1. Always verify the IFS codes from reliable websites such as Paisabazaar.com, bank’s official website, RBI’s website.
2. Before proceeding to make transactions, cross check the IFS code and account number.
3. To avoid a bigger loss because of incorrect details, make a small transaction of RS 10 and wait for the transaction message.

How to Get a Home Loan against Your PF

Over the years, the Indian government has taken all possible measures to make sure every family has a roof over its head. Things have changed a lot from what it used to be- homes are offered at extremely affordable rates by the government as well as private builders; home loans have also become cheaper and convenient, one can apply for a home loan online and get instant approval as well as manage the loan account from the comfort of his home. All this is now possible because we envisioned it way before and made efforts toward it. Several progressive steps are taken by the government to make the housing scenario in India even better.

An important step was taken in 2016 when the government announced a housing scheme for the members of Employees’ Provident Fund Organization (EPFO). Under the scheme, EPFO subscribers are allowed to pledge their Provident Fund accumulations to buy a house or to build one. The monthly PF contributions can also be utilized towards the part or full repayment of their home loan or for making monthly EMI payments. This will make it easier for the middle-class buyers to purchase a home without compromising savings or cutting their monthly budget.

Let’s learn more about how the scheme works-

Home Loan against PF

There are over four crore EPF subscribers in India and it is a progressive move to assist them in buying a house. To explain in layman terms- the scheme allows you to use your PF account as collateral for your home loan. For the purpose of purchasing a house, you are allowed to withdraw funds from your PF account only after the completion of three years from the contribution. You can withdraw 90 percent of PF accumulation in your account or the cost of the real estate, whichever is lower. Earlier this amount was subject to the type of real estate you are buying. For plot purchase, the loan amount was equivalent to 24 months’ basic salary plus dearness allowance. And for buying a flat in an apartment project or for constructing your own house, the loan amount was 36 months’ basic salary and DA.

Withdrawals are possible from the PF account only if-

·         The employee is a member of EPFO for at least three years

·        The fund accumulation as well as the interest is at least Rs 20,000

It should also be noted that this amount can be withdrawn only once. This will be a triparty agreement involving the applicant, bank or financial institution and the EPFO, although the payment will be made by the EPFO directly to the lender bank. In case the allotment is cancelled, the amount has to be refunded into the PF account of the buyer within 15 days. In case the amount withdrawn exceeds the amount spent, the balance will be refunded to the PF account within 30 days of the deal. Home loan against PF can also be taken jointly but the co-applicant can be none other than the primary applicant’s spouse.

Payment of Home Loan EMIs through PF Account

Monthly instalments can also be made from your PF account towards an existing home loan taken in your name or in the name of your spouse. For this purpose, the lending institution will look at the amount contributed to the applicant’s PF account over the last three months.

Benefits of Home Loan against PF

The government is quite serious about making things more convenient for the people of India. A host of online services like linking Aadhaar to your PF account, UAN registrations etc. have been brought forward in a short span of time. Recently, the UAN withdrawal facility was also announced which would allow a member to withdraw his PF accumulation without employer’s signature. Home loan against PF is also very beneficial for the mid-segment homebuyers-

·         No need to squander your savings or cut your monthly budget to get a home loan.

·         You will get the age advantage; the older you are more will be the PF amount.

·         After 5 years of contribution, your PF money is tax-free, so you will enjoy dual income tax benefits on home loan as well as the PF account from which you are financing it.

This is a part of the ‘Housing for All by 2022’ initiative taken by the government. It aims at assisting the working generation in buying the home of their dreams in any location they want unlike the housing schemes wherein the government builds affordable homes for them. Buyers will be free to choose their home from the real estate market without any restriction. They will not only be able to take a home loan on their PF account but also repay outstanding EMIs through the same. There is no big stress to repay the amount as it is, in fact, an advance.

Axis Bank Home Loan for Low-Income Individuals

To have one’s own house is a dream shared by all- whether a businessman or a salaried professional, a shopkeeper or a teacher. While it is easier for some to buy that home through home loan, for others this dream is still a distant one. Lack of proper documents like income proof or ITR makes it hard for home-seekers to fund their purchases through loan, even if they are financially sound to pay monthly EMIs. Axis Bank has been the perfect home buying companion of many homebuyers for a long time. To help the individuals belonging to the low income group buy their dream homes, a new Axis Bank Home Loan has been launched under the name Asha Home Loan.

Axis Bank Asha Home Loan

This Axis Bank Home Loan product is targeted at individuals who do not have complete and proper documentation to avail a normal home loan, mainly the first-time homebuyers. This includes people like grocery shop owner, tailor, salon owner, taxi driver, etc. In such professions, people make daily earnings which are not properly recorded, and even if books are maintained, they are not accepted as valid proofs of income. This is why Axis Bank offers customized variants of their home loans to individuals on the basis of their banking behaviour and a personal discussion regarding their earnings.

Axis Bank Home Loan Eligibility

All individuals whether salaried, self-employed or professionals can apply for Axis Bank Asha home loan provided that the minimum income per month is Rs 8,000. For joint loan, the minimum combined income of all applicants should be Rs 8,000 per month. The minimum and maximum amount of loans is Rs 1 Lakh and Rs 50 Lakhs respectively. There is a 15% margin on the borrowing limits for loans up to Rs 30 Lakhs; for loans above Rs 30 Lakhs and up to Rs 50 Lakhs, this margin is 20%. The loan is available at both fixed rate and floating rate of interest. Foreclosure charges are nil in case of floating rate.

Other Terms and Conditions-

·         The minimum income requirement is Rs 8,000 to Rs 10,000 per month, depending on the location and cost of living.

·         Maximum loan amount is up to Rs 28 Lakhs for locations with population above 10 lakhs and up to Rs. 20 lakhs for locations with population up to Rs. 10 lakhs

·         Repayment period for Home Loans shall not exceed 30 years

·         Processing fee will be charged at 1% of the loan amount or Rs 10000, whichever is higher

Documentation for Axis Bank Asha Home Loan

Applicants have to submit the following documents to be eligible for an Axis Bank Home Loan-

·          

IIdentity Proof- Valid passport/Voter’s ID/Valid Driving license with photo graph/Pan card/Aadhar card;

·          

Residence Proof- Latest Electricity bill/ utility bill/ piped gas bill/ telephone bill/ Passport/ Registered lease Agreement with a utility bill in the name of landlord.

·         

 Income Proof- For individuals- Last 3 months salary slip/Latest Form 16, Last 6 months Bank statement/passbook of the salary account; For Self-employed- Income Tax  Returns for the last 2 years along with an income certificate by a CA, Last 6 months Bank statement for operative account.

In case you do not have complete documents to prove your monthly income or the earnings from your small business, Axis Bank can also extend loans to you based on a personal discussion. Loan executives will check the casual books you maintain at business and if satisfied, the loan will be processed.

Home is a basic requirement and everyone deserves to have a roof over the head. The government is also going that extra mile to provide basic housing to those with modest means. Asha Home Loan is an effort by Axis Bank in this direction as they believe that someone’s profession or lack of papers should not come in the way of owning a house.

Indiabulls Home Loans and Tax Benefits

Getting the key to your dream home is a wonderful feeling. It takes years of hard work and savings for a middle-class family to finally buy a house. Home loans have come a long way in making home buying easier for the people of India. Persistent efforts are being made by the government to give every family a roof over its head; banks and financial institution are not far behind in making this dream a reality. Offering higher loan amount, easy terms and conditions and attractive interest rate, lenders are assisting mid-segment home-buyers in the best possible ways.

One of the most trusted home loan lending institutions is Indiabulls. It is the second largest housing finance company in India and is regulated by the National Housing Bank. Based on the pillars of transparency, integrity, professionalism and customer-centric approach, Indiabulls aims to share the load of homebuyers so that they can focus on other aspects of their new home. Indiabulls home loan can be availed by residents Indians as well as NRIs.

Key Highlights of Indiabulls Home Loan

Indiabulls offers home loans at highly competitive rates customized to meet the needs of different buyer segments. Given below are some of the key reasons why one should opt for Indiabulls home loan-

Purpose of Loan- Through Indiabulls, one can take loan not only to finance the purchase of a house but also for the construction of a residential house on a plot, for extension or improvement of an existing residential property or for the renovation of a house. So for every home related need you have, Indiabulls is there to support you.

Maximum Loan Amount- As a step towards sharing maximum load of a homebuyer, Indiabulls home loan can be taken for 90% of the property value, in case the cost is up to Rs 30 Lakhs. For properties ranging between Rs 30 Lakhs and Rs 75 Lakhs, the loan amount can be up to 80% of the value. For homes costing higher than Rs 75 Lakhs, up to 75% of the value can be funded through home loans. The maximum loan amount, however, is subject to the applicant’s repayment capacity.

Joint Home Loan Facility- Indiabulls home loan can also be taken jointly with a co-applicant subject to certain terms and conditions. Joint home loans are good for those with poor credit scores and they also allow extra income tax benefits.

Maximum Tenure- Usually banks grant home loans for a period of 20-25 years but Indiabulls home loan can be availed for a maximum tenure of 30 years subject to the retirement age of the applicant.

Indiabulls Home Loan Interest Rate

Indiabulls home loans are available at adjustable interest rates. These are linked to its benchmark rate which is subject to change but the monthly EMI outgo remains unchanged. In case the rate increases, the interest component in your EMI will be increased and principal amount is reduced and vice-versa. 

The table given below shows Indiabulls home loan interest rates for different property values-

Home Loan Amount	Adjustable Interest Rates
Upto and including Rs 75 Lakhs	8.65% to 9.75%
From Rs 75 Lakhs up to Rs 3 Crores	8.70% to 10.75%
From Rs 3 Crores up to Rs 5 Crores	8.80% to 11.25%
Above Rs 5 Crores	10.00% to 11.75%

A mix of fixed and floating interest rates is also offered by Indiabulls. The rate is fixed for the first three years after which interest is charged as per the prevailing adjustable rates of interest. The interest rate margin will also be adjusted to the benchmark rates of Indiabulls.

Tax Benefits on Indiabulls Home Loan

One can avail certain tax benefits on Indiabulls home loans. Under section 24B of the Income Tax Act, you can get a tax deduction of up to Rs 2 Lakh towards interest paid on your home loan. Also, under section 80C, You can get deduction up to Rs 1,50,000 from the Income on repayment of home loan principal during a financial year.

Other Benefits of Indiabulls Home Loan

Some other feature of this home loan are-

·         Pre-approved home loan facility is also offered by Indiabulls.

·         No pre-payment / foreclosure charges on home loans.

·         One can manage his loan account online or through Indiabulls latest mobile application.

·         Quick processing and disbursal of loan; online one click approval facility is also available.

·         Balance transfer facility with reduced interest rates and EMIs.