A "low interest" loan shouldn't mean you have very little interest in paying it back!
The Ministry of Housing and Urban Poverty Alleviation has set a route map and has also made clear the eligibility criteria a prospective applicant need to meet. Also has enlisted the help of some leading banks in the country to provide loans for construction under PMAY. The banks offer loans at a comparatively lower rate as government pays the rest on behalf of the applicant. This model of subsidized loans help more economically weaker people to build a house. HDFC Bank has partnered with the government to offer loans to people who have applied for PMAY scheme. Here’s what is looks like:
In order to avail a house or financial reinforcements from the government, every applicant needs to meet the eligibility criteria set by the PMAY committee. Prospective applicants have been branched into six distinct groups
| Section | Eligibility Details |
|---|---|
| Economically Weaker Section (EWS) | People who earn an annual household income less than Rs.3 lakh come under the EWS category. However, an applicant claiming to be from EWS needs to provide relevant proof to the government to ascertain their claims. |
| Light Income Group (LIG) | People that fall under LIG category usually have an annual household income ranging between Rs.3 lakh to 6 lakh. Again, to be eligible for consideration, they need to provide sufficient proof of their economic standing. |
| Medium Income Group (MIG1) | Those who earn an annual household income below Rs.12 lakh fall under the MIG1 category. These people can avail loans of up to Rs.9 lakh for the construction of a residence. |
| Medium Income Group (MIG2) | Individuals earning an annual household income between Rs.12 to Rs.18 lakh will fall under MIG2 of the PMAY scheme. These people can avail loans of up to Rs.12 lakh. |
| Minorities | People hailing from minority groups like SC/ST/OBC will fall under minorities. To be considered under the PMAY scheme, these people need to meet to provide relevant caste and income certificates. |
| Women | Women belonging to EWS/LIG categories will be considered if they apply under the PMAY scheme. |
Besides this, there is a basic requirement an applicant has to meet. For instance, if the beneficiary is a family, it must comprise of a husband, wife, and unmarried children. Also, no person from the family should own a house in their name.
| Amount of loan | Rs.3 lakh |
| Loan amount eligible for the subsidy | Rs.3 lakh |
| Balance loan | Rs.1,66,360.00 |
| Interest subsidy | Rs.1,33,640.00 |
| Initial EMI | Rs.2,895 |
| Reduced EMI after subsidy credit | Rs.1,605 |
| Savings on a monthly basis | Rs.1,290 |
| Savings on an annual basis | Rs.15,480 |
| Amount of loan | Rs.6 lakh |
| Loan amount eligible for the subsidy | Rs.6 lakh |
| Balance loan | Rs.3,32,720.00 |
| Interest subsidy | Rs.2,67,280.00 |
| Initial EMI | Rs.5,790 |
| Reduced EMI after subsidy credit | Rs.3,211 |
| Savings on a monthly basis | Rs.2,579 |
| Savings on an annual basis | Rs.30,948 |
| Amount of loan | Rs.10 lakh |
| Loan amount eligible for the subsidy | Rs.6 lakh |
| Balance loan | Rs.7,32,720.00 |
| Interest subsidy | Rs.2,67,280.00 |
| Initial EMI | Rs.9,650 |
| Reduced EMI after subsidy credit | Rs.7,071 |
| Savings on a monthly basis | Rs.2,579 |
| Savings on an annual basis | Rs.30,948 |
| Income of the household per year | Rs.12 lakh |
| Maximum tenure of the loan | 20 years |
| Interest subsidy per year | 4% |
| Eligible amount of loan for interest subsidy under CLSS (Credit Linked Subsidy Scheme) for MIG | Rs.9 lakh |
| Maximum interest subsidy | Rs.2.35 lakh |
| Rate of discount for NPV (Net Present Value) calculation of the interest subsidy | 9% |
| Dwelling unit max carpet area | 90 sq.mt |
| Monthly EMI (8.65%) with interest subsidy | Rs.5,834 |
| Monthly EMI (8.65%) without interest subsidy | Rs.7,894 |
| Income of the household per year | Rs.18 lakh |
| Maximum tenure of the loan | 20 years |
| Interest subsidy per year | 3% |
| Eligible amount of loan for interest subsidy under CLSS (Credit Linked Subsidy Scheme) for MIG | Rs.12 lakh |
| Maximum interest subsidy | Rs.2.3 lakh |
| Rate of discount for NPV (Net Present Value) calculation of the interest subsidy | 9% |
| Dwelling unit max carpet area | 110 sq.mt |
| Monthly EMI (8.65%) with interest subsidy | Rs.8,059 |
| Monthly EMI (8.65%) without interest subsidy | Rs.10,528 |
PMAY, while being a populist scheme, is also a progressive one as it helps millions of urban poor in the country own a house they can call their own. This scheme, upon completion, will serve as a great model for other developing countries to follow.
The Pradhan Mantri Awas Yojana was initiated back in 2015 with a view to serve a number of purposes. These are:
The Pradhan Mantri Awas Yojana has already helped thousands of people in India fulfil their dreams of owning a house. To make things even better for the prospective homebuyers who are looking to avail a home loan through this scheme, the government has slashed the GST from 12% to 8%.
Any person who is buying a home for the first time will have to pay an 8% GST, provided he/she takes a home loan through the Credit Linked Subsidy Scheme (CLSS) under the PMAY.
There are certain eligibility criteria to be fulfilled in order to successfully avail a home loan through the CLSS. For instance, the applicant’s family income should not be above Rs.18 lakh per annum and the maximum carpet area (area enclosed within the walls) eligible for the subsidy is 150 sqm. The tax benefit will be available for the low-cost housing projects as well. Anyone who does not meet the aforementioned requirements will have to pay 12% GST.
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