If you’re eyeing your dream home and considering a bank loan, here’s some great news. The central government is gearing up to offer subsidies to individuals taking home loans.
A report by Reuters suggests that this forthcoming announcement could be a significant boon for homebuyers just ahead of Diwali.
Allocating Rs 60,000 Crore
According to Reuters, the government is mulling over providing subsidies on home loan interest rates.
With major state elections slated for the end of this year and general elections in mid-2024, banks might implement this Housing Loan Interest Subsidy Scheme within a few months.
Under the government’s proposed plan, they are prepared to allocate Rs 60,000 crore to offer subsidized loans for small urban housing over the next five years.
PM Modi’s Announcement
Back in August, Prime Minister Narendra Modi hinted at introducing a bank loan scheme to aid first-time homebuyers.
Although he didn’t delve into the details at the time, the recent news seems promising for homebuyers.
It’s anticipated that the government may launch the subsidy scheme for home loans before the elections.
Details of the Proposed Scheme
The Home Loan Interest Subsidy Scheme under government consideration is quite detailed.
As per sources in the report, the scheme is poised to provide a 3% interest subsidy on loans up to Rs 9 lakh.
It will offer an annual interest subsidy ranging from 1% to 6.5%. Furthermore, only home loans of less than Rs 50 lakh taken for a 20-year period would be eligible for this proposed government scheme.
Benefitting Low-Income Individuals
According to the report, a government official, speaking about the proposed scheme, mentioned that the interest subvention will be credited upfront into the home loan accounts of the beneficiaries.
He stated that around 2.5 million loan applicants from the low-income group residing in urban areas could benefit from this government scheme.
However, the number of subsidized home loans available will depend on the demand for such housing.
The official, requesting anonymity, mentioned that efforts are ongoing to finalize this scheme.