Pradhan Mantri Awas Yojana is a great initiative that provides affordable housing for weaker sections of the society. If you are eligible for PMAY, you will be able to own your personal home through credit linked subsidy scheme (CLSS). Under this scheme, beneficiaries are provided with interest subsidy on purchase / extension / construction / improvement of house. This subsidy is also known as “credit linked subsidy”.
Who Are The Beneficiaries Of PMAY?
A beneficiary is defined as a family that comprises of husband, wife, and unmarried children. For MIG category, an unmarried individual earning member of the family can also be a beneficiary. Those who have already received any kind of assistance under the CLSS scheme cannot become a beneficiary. Each beneficiary should meet the income criteria that have been mentioned for each group under PMAY. Beneficiary should not own a pucca house in any part of India, either in his/her name or name of any member of his/her family.
Read here to know if you are eligible for PMAY: Are you eligible for PMAY?
How To Acquire Housing Loans?
Housing loans can be acquired from public and private sector banks, housing finance companies, co-operative banks, and other similar institutions that have signed MoU (Memorandum of Understanding) to provide home loans under CLSS to MIG / EWS / LIG categories under PMAY scheme. At the moment, the Central Government has signed MoU with more than 200 primary lending institutions for providing home loans to MIG category under PMAY scheme.
What Is The Interest Subsidy In PMAY?
Individuals who fall under EWS or Economically Weaker Section and LIG or Low Income Group category and are eligible for PMAY can seek home loans. They will be eligible for an interest subsidy @ 6.5% for 20 years or during tenure of loan, whichever is lower.
Similarly, beneficiaries of PMAY who fall under MIG 1 (Middle Income Group 1) and MIG 2 (Middle Income Group 2) category are eligible for an interest subsidy of 4% and 3% respectively for tenure of 20 years or during tenure of loan, whichever is lesser.
How To Avail Interest Subsidy Under PMAY?
The bank will claim subsidy benefit for eligible borrowers from NHB (National Housing Bank). Once NHB confirms the credentials of all eligible beneficiaries, the subsidy amount will be paid to the bank. As soon as the bank receives the interest subsidy, it will credit the amount upfront to the loan account of beneficiary. The subsidy will be calculated at 9% discount rate on NPV (Net Present Value).
In short, through the PLI or Primary Lending Institutions, the interest subsidy will be credited upfront to the loan amount of beneficiaries. This will result in reduced effective housing loan and EMI or Equated Monthly Installment.
To make this simpler, here is an example. If you avail a loan for Rs. 6 lacs and the interest subsidy that you can acquire is Rs. 2 lacs. Then, Rs 2 lacs will be deducted upfront from the loan amount. So, the loan amount will reduce to Rs. 4 lacs. You need to then pay EMIs on the reduced amount of Rs. 4 lacs.
Credit Linked Subsidy:
For individuals falling under EWS and LIG category, the credit-linked subsidy will be available only for loan amounts up to Rs 6 lacs. Those falling under MIG 1 and MIG 2 category will get credit-linked subsidy for loan amounts up to 9 lacs and 12 lacs respectively. If beneficiaries require additional loans beyond the above-mentioned limits, then it will be provided at non-subsidized rates.
The maximum amount of subsidy that EWS and LIG beneficiaries will get is Rs. 2.67 lacs. MIG 1 recipients will get maximum subsidy of Rs. 2.35 lacs and MIG 2 beneficiaries can avail maximum subsidy of Rs. 2.30 lacs.
For EWS, the minimum carpet area of houses that are to be constructed should be up to 30 square meters. LIG beneficiaries should get a minimum carpet area of 60 square meters. MIG 1 and MIG 2 beneficiaries should get up to 90 square meters and 120 square meters respectively to avail the credit linked subsidy.
In October 2017, the Central Government announced that the benefit of interest subsidy of Rs 2.60 lacs on home loans for MIG has been extended by 15 months. So, the benefit of CLSS for MIG can be availed till March 2019.
Ownership Of House:
The ownership of the house under PMAY is different for each group. For EWS and LIG beneficiaries, the ownership of the house constructed or acquired should be in the name of a woman or in joint names of male head of the household and his wife. However, if there is no adult woman in the family, the house can be named under a male member of the family. This condition is applicable only for those beneficiaries who purchase new houses and not for those who make new construction on an existing piece of land or repairs of an existing house.
On the other hand, the beneficiaries of PMAY scheme that fall under MIG 1 and MIG 2 group can have ownership of the house in the name of a man or a woman. Another important aspect that is vital for eligibility is that the property on which a person avails subsidy should have basic amenities like sanitation, water, road, sewerage, electricity, etc.