1% Housing Loan Interest Subsidy Scheme Extended to March 2013

A big relief to middle class families buying houses, central government extended one per cent interest subvention scheme on housing loans up to Rs. 15 lakh by one year.

Home minister Mr. P. Chidambaram said,  “This interest subsidy comes with a rider. The cost of house on which the loan is availed should not exceed Rs. 25 lakh.”

A central government budgetary provision of Rs. 400 crore has been made for 2012-13 to implement the scheme. When interest rates have risen, even 1% relief is a relief for the middle class & lower middle class.

The interest subsidy limit, in actual terms for an individual borrower, would be Rs. 14,912 on Rs. 15 lakh loan, and Rs 9,925 for Rs. 10 lakh loan. The subsidy is only for first year.

The extended scheme will benefit all house loans availed this financial year (2012-13).


Small buyers, especially in tier-II &  tier-III cities, will gain from this move as the cost of housing in these cities is lower compared with metros. But in metros, this scheme has no relevance, as it’s difficult to find property less than Rs. 25 lakh. This will reduce the impact of prevailing high interest rate on housing loans hike.

The NHB (National Housing Bank) is the nodal agency for implementing the scheme both, for  banks & HFCs (Housing finance companies)

Mr. R V.  Verma, CMD, NHB said, ''This scheme is meant to help people negate high interest rate”

The one per cent interest subvention on housing loans was first introduced in September 2009 and it was available for loans up to Rs. 10 lakh only, provided the cost of the housing unit did not exceed Rs. 20 lakh. The scheme was liberalised in 2011-12 for loans up to Rs. 15 lakh, provided the cost of house did not exceed Rs. 25 lakh. The scheme has now been extended for one more year. In 2011-12, the provision for the scheme was Rs. 300 crore which was fully utilised.

The National Housing Bank (NHB) - Chennai
Contact Person : Shri W.C. Robin, 044 - 2440 1180
Repco Bank Building No. 55, 2nd Floor Gandhi Nagar,
IVth Main Road, Adyar, Chennai - 600020

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