Estimated reading time: 6 minutes
If you lack sufficient funds and seek financing for your dream home, various housing finance options are available. However, navigating through each option to find the best deal can be daunting, especially for newcomers. Fortunately, the credit linked subsidy scheme (CLSS) simplifies this process, making home ownership more achievable for many.
CLSS is a key part of India’s plan to make homes more affordable under pradhan mantri awas yojana (PMAY). It gives subsidies on home loan interest to eligible people, making it easier to pay off loans and own a home.
If you’re curious about accessing this opportunity, this guide will explain how CLSS works. By the end, you’ll know if you’re eligible, how to apply, and the perks you can enjoy. Armed with this knowledge, you’ll be ready to confidently chase your dream of owning a home.
What is a credit linked subsidy scheme (CLSS)?
The credit linked subsidy scheme (CLSS) is a government initiative to make housing more affordable. Its objectives include promoting home ownership, enhancing housing accessibility, supporting PMAY, and targeting different income groups.
Through CLSS, eligible beneficiaries receive subsidies on home loan interest, easing the burden of repayment.
What are the key components of CLSS?
Types of beneficiaries:
- Economically Weaker Section (EWS)
- Lower Income Group (LIG)
- Middle Income Group (MIG)
Interest subsidy: CLSS provides interest subsidies on home loans for eligible beneficiaries, reducing the overall cost of borrowing.
Loan amount: The subsidy amount varies based on the income category of the beneficiary and the size of the loan.
Participating lenders: Banks, housing finance companies, and other financial institutions partner with the government to provide CLSS benefits to eligible borrowers.
How does the credit linked subsidy scheme (CLSS) work?
Application process: Eligible applicants apply for CLSS through banks and housing finance companies, providing necessary documentation like proof of identity, income, and property details.
Verification and approval: Lenders verify the applicant’s eligibility based on income criteria and other specified parameters. Upon verification, eligible applicants are approved for the CLSS subsidy.
Loan disbursement: Once approved, the lender disburses the home loan amount to the beneficiary for the purchase or construction of the property.
Subsidy disbursement: The subsidy is directly credited to the beneficiary’s loan account by the lender, following the repayment schedule and subsidy release guidelines.
Reduction of loan burden: The subsidy effectively reduces the outstanding principal amount of the home loan, thereby decreasing the monthly loan repayment burden for the beneficiary.
Continuous support: CLSS continues to support beneficiaries throughout the loan tenure, providing financial relief and stability in homeownership.
What is the eligibility criteria for CLSS?
Income Criteria: Beneficiaries are categorized based on their household income into EWS, LIG, MIG-I and MIG-II, and others.
Also specific income thresholds are defined for each category to determine eligibility for CLSS subsidy. To qualify for CLSS, your household income must fall within certain ranges:
| Category | Household Income Threshold |
|---|---|
| EWS | Up to ₹3 lakh annually |
| LIG | ₹3 lakh to ₹6 lakh annually |
| MIG-I | ₹6 lakh to ₹12 lakh annually |
| MIG-II | ₹12 lakh to ₹18 lakh annually |
Meeting these income criteria is crucial to be eligible for CLSS subsidies.
Applicant’s citizenship: Applicants must be Indian citizens to qualify for CLSS benefits.
Family ownership: Only families that do not own a pucca house (a permanent dwelling unit) are eligible for CLSS subsidy.
Property size and location: The property for which CLSS subsidy is sought must meet certain size and location criteria as specified by the scheme guidelines.
Loan criteria: CLSS subsidy applies to home loans for purchasing or constructing residential properties within specified limits.
Valid documentation: Required documents include proof of identity (Aadhar card, PAN card), income proof (salary slips, tax returns), residence proof (utility bills), and property documents (sale agreement).
Compliance with PMAY guidelines: Beneficiaries must adhere to the broader guidelines of the Pradhan Mantri Awas Yojana (PMAY), under which CLSS operates, to qualify for the subsidy.
Adherence to lender’s policies: Applicants must meet any additional eligibility criteria set forth by the lending institution offering the home loan under CLSS.
What are the benefits of CLSS?
| Benefit | Description |
|---|---|
| Reduced interest burden | CLSS offers interest subsidies on home loans, reducing borrowing costs for beneficiaries and making homeownership more affordable and sustainable. |
| Enhanced affordability | By lowering monthly loan installments, CLSS enhances housing affordability across income segments, granting access to better-quality housing options previously out of reach for many. |
| Financial inclusion | CLSS promotes financial inclusion by offering housing finance opportunities to those with limited access to formal banking, facilitating homeownership for marginalized and economically weaker sections. |
| Fulfillment of PMAY objectives | CLSS aligns with PMAY’s goal of “Housing for All” by 2022, providing affordable and sustainable housing solutions to all segments of society. |
What are the challenges and limitations of CLSS?
Awareness and outreach: Limited awareness about CLSS poses a challenge, potentially causing eligible individuals to miss out on its benefits due to inadequate outreach efforts.
Documentation and eligibility: Also meeting documentation and eligibility criteria can be challenging for applicants, potentially deterring them from availing CLSS benefits due to complex requirements and verification processes.
Limited coverage: Moreover CLSS, has limited coverage and may not fully address the housing needs of all eligible individuals and families. Factors like income thresholds, property size requirements, and geographical limitations can constrain the scheme’s reach.
Get a Home Loan
with Highest Eligibility
& Best Rates
What are some key tips for availing CLSS?
Stay informed: Keep yourself updated about the latest developments and guidelines related to CLSS scheme through official channels and resources.
Prepare documentation: Also ensure that you have all the necessary documents ready. This includes identity proof, income proof, and property documents, to expedite the application process.
Plan ahead: Moreover you can plan your housing purchase or construction project in advance. This is to leverage the benefits of CLSS effectively.
Be persistent: Stay persistent. You should follow up with the lending institution and government agencies to track the progress of your CLSS scheme application.
Seek assistance: PMAY CLSS offers a chance for those aspiring towards homeownership. To maximize your chances of benefiting from CLSS scheme, navigating the application process with clarity and confidence is crucial.
We strongly advise seeking guidance from housing finance professionals. They can offer valuable insights into eligibility criteria and guide you through the application step by step.
For personalized assistance, you can turn to experts like Credit Dharma.
Frequently Asked Questions
The maximum subsidy amount available under CLSS depends on the beneficiary’s income category:
Economically Weaker Section (EWS) and Lower Income Group (LIG): Up to ₹2.67 lakh.
Middle Income Group (MIG-I): Up to ₹2.35 lakh.
Middle Income Group (MIG-II): Up to ₹2.3 lakh.
The approval timeline for CLSS can vary depending on factors such as the applicant’s eligibility, documentation completeness. Generally, it may take a few weeks to a couple of months for applicants to receive approval for CLSS.
Yes, existing home loan borrowers meeting the eligibility criteria specified under CLSS can avail of the subsidy benefits. However, certain conditions may apply, such as the property being eligible for CLSS and the borrower meeting the income criteria.
HDFC Home Loan
SBI Home Loan
