Subsidy for first home buyers: Pay up to Rs 2.4 lakh less on 20-year loan tenure

New Delhi: There is good news for the first home buyers.The government is offering a subsidy of Rs 2.4 lakh for a loan tenure of up to 20 years.

The subsidy for buying the first house would be available to those having an annual income of Rs 18 lakh. Earlier the subsidy on buying a house was available only for those earning up to Rs 6 lakh per annum. 

In its housing for all by 2022 drive, the government has announced two new subsidy slabs to encourage first home buyers.

The subsidy will apply to loans with a tenure of up to 20 years, unlike the 15 year loan tenure applicable currently.

Check out the subsidy under Prime Minister Awas Yojana on buying the first home for different income bracket as follows:

1. Income less than Rs 6 lakh per annum will get a subsidy of 6.5 percentage points on a principal component of Rs 6 lakh, regardless of the total loan amount.

Example: For the money borrowed at 9% interest, they will pay only 2.5% interest on Rs 6 lakh, and 9% on the remainder.

2. Income up to Rs 12 lakh per annum will get interest subsidy of 4 percentage points on a principal component of Rs 9 lakh

3.Income of up to Rs 18 lakh per annum will get a subsidy of 3 percentage points on a principal component of Rs 12 lakh. 

So, all three categories can have a benefit of roughly Rs 2.4 lakh (assuming an interest rate of 9%) for a 20-year loan tenure, and the monthly installment reduces by around Rs 2,200.

The subsidy benefit will be over and above the income tax benefits on home loans. So, anyone falling in the 30 percent tax bracket can avail tax benefits up to Rs 61,800 per annum.