The purchase of a home is probably the biggest landmark in life, but to most of the middle and lower-income families, it is a far-fetched dream. With Credit Linked Subsidy Scheme (CLSS) through the Pradhan Mantri Awas Yojana (PMAY), people have entered into a new genre of receiving housing loans. This scheme alleviates the burden of repayment of home loans as it provides subsidised interest on home loans, and such families are able to enter their new homes well.
This step-by-step handout covers what the CLSS is, the eligibility requirements, how to apply, documentation and the benefits it provides.
Credit Linked Subsidy Scheme (CLSS)
The Credit Linked Subsidy scheme is a government intervention program to help first time home buyers feel the affordability of housing loans. It is operational in subsidized interest on home loans availed at reputable banks, housing finance companies and the non-banking financial companies.
Asap subsidy is sanctioned, it can be directly added to the account of the borrower, hence reducing the amount of the outstanding loan. Such an immediate cut lowers the amount of EMI to be paid monthly, making the repayment a less hassling affair.
Target Beneficiaries of CLSS
The scheme is intended to fit all levels of income. Economically Weaker Section (EWS) refers to the houses whose annual income is less than or equal to three lakh rupees. The Lower Income Group (LIG) encompasses those households with earnings of three to six lakh rupees in a year. The Middle-Income Group is further bracketed into two, i.e. MIG I and MIG II where income between people with earnings between six lakh and 12 lakh rupees, and twelve to eighteen lakh rupees annually resides respectively.
With these segmentations, CLSS makes sure homeownership is not reserved for households with higher income only but covers those who usually struggle to access affordable funds.
Features of the Scheme
Credit Linked Subsidy Scheme provides varying interest subsidy rates that are based on the income group. Subsidy of 6.5 percent is applicable on loans up to six lakh rupees in EWS and LIG households. MIG I has an interest subsidy of 4 percent on a loan of nine lakh, and the contingent interest subsidy of 3 percent on a loan of twelve lakh in the case of MIG II.
One can bestow a maximum of 20 years of loan period. The eligibility also differs based on property size, with EWS and LIG having sixty square meters, but MIG II has 200 square meters of property. These specifications make the scheme accommodate useful and in-demand housing.
Eligibility of CLSS
Applicants have to fulfil some requirements to be able to take advantage of CLSS. The interested party or his/her relatives are not expected to already have a pucca house in any part of India. None of the members of the family should have been on any other housing scheme where the central government provided financial aid.
In the case of married couples, single ownership or joint ownership can be availed, though it is deemed likely that one family unit is involved where the sender and the scheme are concerned. Besides, the property has to be placed in statutory towns according to the 2011 Census or in adjoining regions, which were notified after.
Application Process – CLSS
Applying to participate in the Credit Linked Subsidy Scheme starts by selecting a lender who is approved by the scheme. It could be a bank, a housing finance company or any other financial institution approved by the central bank. Applicants must make an application for a home loan and should make it clear that they intend to take the CLSS benefit.
After filling the application, it is validated by the lender on the basis of the scheme guidelines, income information and property profile. Once approved, the loan is approved and the lending institution posts the subsidy claim to one of the Central nodal agencies like HUDC or the National Housing Bank. Once the agency clears the claim, the subsidy is credited towards the loan account of the borrower, which reduces the outstanding principal balance and hence the EMIs.
Records Requirement of CLSS
Though the specific document requirements can differ according to the lenders, there are documents that are key in every application. These are Aadhaar card of the entire family, PAN card, evidence of income in terms of salary slips and income tax returns, bank statements, proof of property or an agreement.
Furthermore, an affidavit has to be placed stating that a benefit of any other central scheme of housing has not been availed out of. The lender may also need passport-sized photos and other KYC files.
Benefits of Credit Linked Subsidy Scheme
The bottom line benefit of CLSS is the decrease in loan concern. The principal to be paid is reduced at the onset to ensure that the entity borrowing gets a low EMI and the loan is affordable.
The scheme also caters to affordable housing by extending support to first-time buyers in lower and middle-income groups. With a long tenure of up to 20 years, during which the subsidy may be availed, the repayment is convenient and less financially straining.
The other crucial benefit is the fact that the scheme has a wide range of income categories, where people in low-income categories can also access the housing finance. This aspect portrays the inclusive aspect of the government in terms of providing Housing for all.
Common Pitfalls to Avoid
As borrowers apply to CLSS, they end up making several mistakes that may either postpone or even block their approval. The error of selecting a lender who is not registered with the scheme is common. Processing can also be decreased by the lack of providing complete and correct documents. Before applying, applicants are advised to make sure that they meet the scheme’s eligibility criteria in terms of income and property.
Conclusion
To construct or do renovation in a home, the Credit Linked Subsidy Scheme is a useful source of financial benefit. The applicability process is easy with the benefits and the support cut to cross many income brackets.
Homebuyers can end up saving lakhs of interest by making the application using an accredited lending circle, and making the property fulfil the scheme eligibility criteria. Proper planning and timely availment can help convert the homeownership dream into reality through CLSS, and not become an insurmountable financial burden.
