Owning a house is every Indian’s dream. But the skyrocketing price of real estate makes most of the people away from realising their dream. The government of India has initiated a scheme called Pradhan Mantri Awas Yojana which will help to families owning a house. If you want to know the effect of GST on home pricing, I recomend you to read my article ‘Effect of GST on Home buyers‘.
The program is targeted to the people belong to Schedule caste/ Schedule tribe, economically weaker section (EWS) and Lower Income group (LIG). Women and senior citizens will be given special preferences for this scheme.
The scheme would have three phases which were conceptualized during the start of the project:
- April 2015 – march, 2017 – 100 cities in India
- April 2017 – March 2019 – 200 cities in India
- April 2019 – March 2022 – All remaining cities in India
The benefits under the scheme are as follows:
- The subsidy will be given to people of EWS and LIG section of the urban area. The subsidy ranges from Rs 1lakh to Rs 2.3 lakh, any amount in between. It will be given by Government of India.
- The interest subsidy will be given by Government of India. The interest will be through National Housing Bank (NHB) and Housing and Urban Development Corporation (HUDCO).
- The amount of subsidy depends on the yearly income of the family
|Annual Income (Rs)||Interest subsidy (%)||
Max value of Loan for which subsidy is applicable
|Up to Rs 6 lakhs||6.5||Rs 6 lakhs|
|Rs 6 lakhs to Rs 12 lkahs||4||
Rs 9 lakhs
|3||Rs 12 lakhs to Rs 18 Lakhs||3||
Rs 12 lakhs
Suppose, the interest rate on the loan is 8.5%, the effective interest rate under this scheme shall be 2% for up to Rs 6 lakhs.
The scheme is applicable for the people whose home loan has already been approved and the applications are under consideration from January 1, 2017.
The main features of this scheme are as follows:
- The women will get the priority of the benefit of affordable homes built under this scheme. Other than women, the SC, STs will also get the priority for the benefit.
- While allotting the homes, the senior citizens and differently able persons will be given priority for the ground floor.
- Eco-friendly and environment-friendly methods will be used for building the homes.
- The scheme is applicable for construction of a new house. This is also applicable for repurchase/ extension or renovation of old houses also.
- The family will get the benefit when any of the family members does not own a home in their name at the time of application.
- The tenure of the loan can be maximum of 20 years. It means the scheme is not applicable for a loan of more than 20 years. There is no higher limit of the loan under this category.
- The total interest subsidy of a Rs 9 lakh loan for a period of 20 years would be approx. Rs 2.3 lakh.
- Interest subsidy shall be provided for a house with the carpet area of not more than 120sqm for the income up to Rs 12 lakh and 150 sqm for the income up to Rs 18 lakh.
- The total interest will be paid upfront to the beneficiaries at one go. It will help the beneficiaries to pay the EMIs
- The beneficiary should not own a pucca house either in his name or in the name of any of the family member. And family means husband, wife and unmarried children.
How to Apply:
Here is the step by step procedure to follow when you apply for the benefit:
- Go to the website.
- Put your AADHAAR number
- Fill up the form
- Otherwise, go to any of the Common service center located at the different cities from where you can apply.
- Check the website whether you are eligible for the benefit or not by clicking here.
- Beneficiaries who are eligible for Credit Linked Subsidy Scheme (CLSS) have to apply through the concerned bank or NBFC from where the loan has been taken.
As already informed that Government f India is paying the subsidy upfront at one go.
Suppose, you have taken a loan of Rs 15 lakhs and annual income is in the bracket of Rs 6 lakhs- to Rs 12 lakhs.
So, you are eligible for 4% interest subsidy on Rs 9 lakhs.
You can also check your subsidy on the government website.
The subsidy is coming out as Rs 2.2 lakhs which will be paid to the bank. Bank will calculate the EMI based on the new outstanding loan value i.e. Rs 12.8 Lakhs
The new EMI based on Rs 12.8 lakhs shall be for 20 years 11,190
If you would not have taken the benefit the EMI shall be Rs 13,112.
The saved EMI is Rs 1922
A major portion of Indians doesn’t have the comfort of a home. This initiative is very good if it is implemented well. Slum dwellers and lower income people will get their own home under this scheme. The extension of the benefit of CLSS scheme to MIG will surely boost the real estate sector. This will also ease the life of MIG people in the form of lower EMI.
If you have already availed the benefit, share your experiences.
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