NTH :: Urban poor will now get cheaper home loans

TNN | Jun 18, 2015, 12.47AM IST | Times of India


NEW DELHI: Owning a house by people from economically weaker section (EWS) including slum dwellers and low income group (LIG) in cities and towns will be easier as the government on Wednesday approved a steep hike in interest subsidy for beneficiaries of these categories – from 5% to 6.5% – under the flagship “Housing for All” scheme.

This means the overall interest rate payable by the beneficiaries would be around 4%, Union minister Ravi Shankar Prasad said. TOI on Wednesday had reported this proposal of government, which had emerged after an inter-ministerial consultation.

It also widened the criteria to bring more beneficiaries under this scheme by increasing the income limit. Moreover, to ensure that the marginalized sections of society get the benefit of this scheme, transgenders, widows, women, SCs, STs and disabled will get priority under this programme. The Cabinet also expanded the lending base by allowing cooperative banks, urban cooperative banks and micro-financial institutions to finance affordable housing besides the public sector banks and housing finance corporations.

Moreover, to provide greater comfort to lenders, the government has also decided that the loan subsidy amount will be given up front against the earlier practice of releasing it on quarterly basis.

The government is likely to formally launch the “Housing for All by 2022” scheme by next week.

Sources said the higher interest subsidy decision would benefit urban poor by an amount of Rs 2.30 lakh each and as a result of this the monthly EMI would come down by Rs 2,582 per month. According to housing ministry official, at present, with the interest rate of 10.50%, current EMI on admissible loan component of Rs 6 lakh, over 15-year loan duration works out to be Rs 6,632 per month. With Cabinet deciding to increase credit-linked subsidy, EMI comes down to Rs 4,050 per month thereby benefiting the urban poor by Rs 2,582 per month, he said.

On the whole, central assistance in the range of Rs 1 lakh to Rs 2.30 lakh per beneficiary would be provided under different components of the National Urban Housing Mission in urban areas to build two crore new houses to meet the housing shortage over the next 7 years.

The Cabinet had earlier approved four components to the mission. Under the redevelopment plan of slums with participation of private developers using land as a resource component, a central grant of Rs 1 lakh on average per beneficiary would be provided. States/ Union Territories are at liberty to use this grant for any slum redevelopment schemes to be taken up to make such projects viable, if required.

In the second category, is the affordable housing through credit-linked subsidy scheme.

Under third component of affordable housing in partnership with private and public sectors, central assistance of Rs 1.50 lakh to each beneficiary would be provided to promote housing stock for urban poor with the involvement of private and public sectors, provided 35% of dwelling units of the projects proposed are earmarked for EWS category.

Individual beneficiary-led construction or enhancement of houses falls in the fourth category where a central assistance of Rs 1.50 lakh would be provided to those eligible to enable him to build his own house or undertake improvements to existing houses.


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