Home loan interest rates – How they can help you buy your home

by Litty Jose Finance Analyst

Home loans are the best way to finance your dream of owning your own home or flat. The economy is favorable and banks have made it really simple for you to get housing loans. It’s just a few clicks away, they say. It is that simple. You can even apply for your home loan online now, and get it approved in no time at all. Banks even offer special home loan interest rates.

The government too is making efforts to make it simple for more citizens to get home loans. The Reserve Bank of India recently slashed the repo rates (rate at which banks borrow from the Central Bank) for banks in the hopes of reducing home loan interest rates in the country. This means that both new customers and the ones who already have a home loan can breathe easy as the EMIs they have to pay since they are going to go down steadily, if not immediately then in the near future. This is all happening because the rate of inflation in our country is falling.

The government also introduced a new credit linked subsidy scheme called the Pradhan Mantri Awas Yojana (PMAY). PMAY is an interest subsidy scheme that has been named as 'Credit Linked Subsidy Scheme for Middle Income Groups – CLSS (MIG)'. As per this new subsidy, middle-income groups with incomes in the eligible range will get a subsidy on their interest rate of three to four percent. This scheme has been devised to ensure that more and more people can avail of housing loans and purchase their own homes.

Under the guidelines of this scheme, preference will be given to women. Widows, single working-women, persons belonging to scheduled castes and scheduled tribes, backward classes, differently abled and transgender people will be given more preference. Non-banking finance companies and micro finance institutions are also recognized under this scheme in order to ensure that maximum number of people can benefit from it.

Here are the income slabs as be the revision of the Pradhan Mantri Awas Yojana

1. People with an annual income of Rs.6 lakhs and below can avail of loan of Rs.6 lakhs at an interest of 6.5% for a tenure of 20 years.

2. People with an annual income of Rs.12 lakhs and below can avail of loan of Rs.9 lakhs at an interest of 4% for a tenure of 20 years.

3. People with an annual income of Rs.18 lakhs and below can avail of loan of Rs.12 lakhs at an interest of 3% for a tenure of 20 years.

This scheme can help you save on Home Loan interest and finally buy that home you’ve always dreamt about.