Home loan EMIs to cost Rs 10,000 less

Home loan seekers can save up to Rs 10,000 on their monthly repayments for one year as the government on Thursday approved 1% interest
subsidy for houses that cost less than Rs 20 lakh.

Aimed at promoting low-cost housing, the subsidy will be available for loans up to Rs 10 lakh, provided the cost of the dwelling unit does not exceed Rs 20 lakhs, minister of information and broadcasting affairs Ambika Soni said after a meeting of the union cabinet which cleared the proposal of the finance ministry.

"It is expected that cut in interest rates should reduce Equated Monthly Installments (EMIs) of borrowers and create additional demand for housing, particularly in the low cost category", she said, adding the scheme would cost the exchequer Rs 1,000 crore and benefit about 10 lakh borrowers.

Besides, she added, the move "in turn should stimulate demand in the construction industry as well as industries such as steel and cement having employment and income multiplier effect."

The cabinet approved the scheme for providing interest rate subsidy on houses in pursuance to an announcement made by finance minister Pranab Mukherjee while replying to the debate on the budget for 2009-10 in July.

Though the scheme would help loan borrowers in small cities, it would not be of much benefit to those looking for houses in metropolises like Delhi, Mumbai and Bangalore as the cost mostly exceed the threshold of Rs 20 lakh.


source : Times of India