How a Joint Home Loan increases your Savings

If you are planning to buy your own home, under the Pradhan Mantri Awas Yojana (PMAY) scheme, remember that there are only a few months left for you to gather the amount for down payment, select a good builder, a desirable location, and also the home loan lender.

The recently introduced Credit Linked Subsidy Scheme (CLSS) for Middle Income Group (MIG) is applicable only for a period of one year starting 1.01.2017. Let's understand who all are eligible for the MIG category, who all can apply, how does the subsidy impact the loan amount and how much is the subsidy on home loan.

The middle-income earners

●       The MIG category further comprises of two slabs.

●       The Middle Income Group (MIG) - I include households having an annual income between Rs.6,00,001 up to Rs.12,00,000.

●       The Middle Income Group (MIG) - II includes households having an annual income between Rs.12, 00,001 up to Rs.18, 00,000.

  Cost

●       There is no processing charge for eligible housing loan amount as per the income criteria specified in the Scheme.

●       Lenders can charge the normal processing fee for additional loan amounts beyond the eligible loan amounts for interest subsidy.

The impact

●  The Prime minister awas yojana scheme for MIG buyers might not increase the demand for residential housing to a great extent.

●  The benefit of Rs 2.3 lakh/Rs 2.35 lakh probably won't be that appealing keeping in mind the cost of houses in the urban areas.

● There is a possibility that the government might consider doing away with the area restriction of 90/110 sq mt to increase the demand.

How is the subsidy adjusted?

●  The home loan interest rate subsidy will be credited directly to the loan account of the beneficiaries.

●   This would lead to decreased effective housing loan and home loan EMI.

Loans under PMAY

●  You can avail the Pradhan mantri awas yojana benefits if you wish to acquire a new house from the the builder and even for purchasing a house from the secondary market through repurchase.

●  One could also apply for a loan for the construction of the house. You can also apply home loans online.

●  If someone already owning a home wishes to avail pm awas yojana benefit, there's still a possibility.

●  The government has made it clear that the Mission (Housing for All by 2022) also offers enhancements/incremental housing to the existing 'pucca' house under the CLSS scheme component.

It is imperative to keep in mind that even if you are a first-time buyer it is wise to tread carefully and weigh all the options prior to venturing out to explore the affordable housing segment.

Advantages for woman home loan applicants

If you live in India right now or are an Indian citizen, then let us tell you that there couldn’t be a better time for you to invest in property in this country. The real estate market is rife right now and with all the cash inflow that the banks saw during the PM’s demonetisation drive, they have decided to slash interest rates significantly on home loans. But if you’re a woman seeking a home loan in this country then you’ve got an added advantage. There are a lot of schemes and subsidies exclusively available to women seeking home loans. Here are the benefits that women receive on applying for a housing loan.

1.      Lower Interest Rates: Home Loan Interest rates are a huge deciding factor when it comes to choosing a home loan provider. People usually choose their loan provider on the basis of who’s offering them the lowest interest rates. Since a housing loan is a huge amount, even a slight variation in interest rates can make a huge difference. Woman applicants usually get lower interest rates or interest subsidies on their home loans. But these are applicable only when the woman is the sole or primary applicant for the home loan.

2.      Lower Stamp Duty Rates: The stamp duty rates for new property are decide by the state government and differ from state to state. In many states the stamp duty for women is lower than that for men. Women usually receive a concession of one or two percent on stamp duty while purchasing property. This makes a huge difference to loan amount borrowed. For example, it could mean a straight price cut of Rs. 2 lacs for a house that costs Rs. 1 crore.

3.      Higher Approval Chances: Women who are primary applicants for a housing loan are more likely to get their loan sanctioned than men. This does not mean that a bank or NBFC will overlook their other criteria for women. They will still study their eligibility and credit score, but it is a common perception that women are more likely to repay their loan on time and are more reliable and hence their applications are more likely to get approved than those of men.

4.      Special Schemes: Like banks offer special account facilities for women, they also offer special schemes when a woman is the sole or primary applicant for the home loan. In addition to these some developers and builders also provide certain time bound financial schemes for women to encourage them to invest in property. 

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Is this the right time to transfer your Home Loan?

With the huge amounts of funds deposited into banks during demonetization in India, banks have reduced their home loan interest rates a great deal. A number of banks have reduced their housing loan interest rates by 50 basis points making their current rate is 8.5 per cent. Following SBI other banks and NBFCs too have reduced their rates, one whom has reduced its housing loan interest rates by 45 basis points. These rate cuts will mainly benefit new borrowers. But this doesn’t mean that existing borrowers cannot benefit from these reduced rates at all.

If you currently have a home loan and are thinking of transferring, you loan due to lower interest rates at another provider this just might be the right time to do so. Here are some factors you can consider that would help you decide whether you should opt for a home loan balance transfer now:

1.      Savings is the main reason for transferring home loans. But make sure that you opt for a home loan balance transfer only if the total savings in interest payout is substantially higher than the cost incurred while transferring the loan. Usually, the new lender will charge various fees, such as conversion fee, processing fees and administrative charges during the loan transfer.

2.      Transferring your home loan to a new lender is similar to availing a fresh loan, where the new lender will have its own set of terms and conditions. You can use it to re-set your loan EMI and tenure and top up as well. Opt for a home loan transfer if your existing lender is not allowing you to reset the terms and conditions of your loan.

3.      Usually banks and NBFCs provide top up loans to existing borrowers. These are just like personal loans but their interest rates are lower than a separate personal loan. One may require a top up in case of funds required for an emergency or in case of a home loan for renovations. Transfer your loan only if your current provider is not allowing you a top or if the new provider is offering you a better rate.

Transferring home loan to a new lender helps one to reap benefits of a fresh loan in itself. Having a better rate of interest is beneficial in the long run and if need be one can always opt in for better rate provided by banks, NBFCs or other financing institutions. Click here to know more about home loan interest rates.