Centre May Soon Announce ₹60,000 Cr Subsidy on Housing Loans

The Central Government of India is planning to give subsidy on Housing Loan. According to the report by news agency Reuters, the government is planning to spend Rs 60,000 crore (~ US$7.2 billion) to provide subsidized loans for small urban housing for the next 5 years.

Prime Minister Narendra Modi announced the plan in a speech in August on the country's Independence Day, but its details have not been previously revealed.

In this yet-to-be-announced scheme, annual interest subsidy between 3 to 6.5% will be provided on the loan amount up to Rs 9 lakh. Sources said home loans of less than Rs 50 lakh, with a tenure of 20 years, will be eligible for the scheme.

According to Reuters, banks are likely to roll out the scheme in a couple of months, ahead of key state elections later this year and general elections due in mid-2024.

The interest subsidy will be deposited upfront directly into the housing loan account of the beneficiaries,” said the Reuters report citing a government official. This scheme, proposed till year 2028, is being finalized and will require Cabinet approval. The official said that this scheme can benefit 25 lakh loan applicants from low income groups in small-urban areas but the quantum of subsidised credit will depend on demand for such homes.

PM Modi had said in his speech in August, "We are coming up with a new scheme in the coming years, which will benefit those families who live in cities, but are living in rented houses, or in slums. Are living, or are living in chawls and unauthorized colonies."

Lenders have not been provided any specific lending targets about this scheme but a meeting with government officials is likely soon, two bank officials told Reuters.

Earlier in 2017-2022, the Government had ran similar scheme under which 12.27 million homes were sanctioned.

 

How to Calculate Your Home Loan EMI Through Various Methods

After hunting and exploring many different types of houses, when you have finally found your dream house, the next step is to figure out finances. Home Loans are designed to provide financial assistance to people for purchasing their dream house. The banks offer loan amount that is equivalent to 80% of the property price.

The loan amount is paid back in simple monthly installments to the bank in the form of Home Loan EMI. The Equated Monthly Instalments (EMI) include the loan amount as well as the interest on the loan amount. There are various methods to calculate Home Loan EMI. Read the blog to know more !!

Factors that Influence Home Loan EMI Calculation

Before applying for a Home Loan, one must check their eligibility online on the Home Loan Eligibility calculator. The applicant needs to enter information in the Home Loan Eligibility calculator like income, occupational status, etc. The calculator will assess the information and display the eligibility status accordingly.

Once you are eligible for Home Loan, the next thing you must be aware of is the factors that influence the Home Loan EMI calculation -

• Amount - The loan amount is generally 80% of the property price financed by the banks or financial institutions.
• Tenure - The duration of the Home Loan also influences the EMI.
• Interest Rate - This factor is one of the most influential factors in any loan. Applicants applying for loans always explore and hunt for lending institutions offering lower interest rates on loans.

Home Loan EMI Calculation Methods

There are various methods one can choose from to calculate Home Loan EMI by themselves -

1. Manually using Formula

The first and simplest method for calculating Home Loan EMI is a manual calculation using the compound interest formula. You will have to just enter the values simply in the formula and solve the equation. The Formula to calculate the Home Loan EMI is (P*R*(1+R)^N)/(1+R)^N -1)

2. Microsoft Excel

In case, one is not fond of mathematics or solving equations, the second option to calculate Home Loan EMI is through an excel sheet. An excel sheet can solve complex equations in seconds, with accurate answers. Use the PMT Fx function and enter principal, time, and interest rate, and click enter. The Home Loan EMI will be visible on the screen.

3. Online EMI Calculator

The online EMI calculator is one of the simplest and quickest Home Loan EMI calculation methods. Enter the details like amount, time, and rate of interest. The online EMI calculator will instantly show the EMI values. The user can also adjust the details before applying for a loan.

Conclusion

Home Loan EMIs have to be carefully planned to ensure that you do not end up in any financial burden. Choosing the bank that offers the lowest interest rate with other perks and benefits will help you to sail through your loan tenure smoothly. Therefore, calculate your EMI values, analyze them according to your financial capacity, compare them meticulously and then choose.