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.
There will be no subsidy provided under the Pradhan Mantri Awas Yojana (PMAY) scheme for those who already own a house and want to undertake any modification or reconstruction activities.
This scheme is only for those who do not already own a ‘pucca house’. It will be applicable only for any type of major renovation that will led to the upgradation of the house from a kutcha to a pucca house.
27 July 2018
The Housing and Urban Affairs (HUA) Ministry has informed that the government has approved a 33% increase in carpet area of houses constructed under its affordable housing scheme called Pradhan Mantri Awas Yojana-Urban (PMAY-U). The move has been made to attract more beneficiaries, the Ministry stated. Following the approval from the government, the carpet area of the house has been enhanced to 160 square metres from the existing 120 square metres for Middle Income Group-I (MIG-I). As for Middle Income Group-II (MIG-II), the carpet area has been increased to 200 square metres from 150 square metres. It was informed that the new rules would be effective from the date when the scheme became operational i.e 1 January 2017.
As part of the PMAY-U scheme, each beneficiary who purchases a house can avail subsidy up to Rs.2.35 lakh under the Credit-Linked Subsidy Scheme (CLSS). In the case of MIG-I, 4% interest subsidy can be availed on loan up to Rs.9 lakh by people who have an annual income in the range of Rs.6-12 lakh. For those who have an annual income between Rs.12-18 lakh, interest subsidy of 3% is provided on loan up to Rs 12 lakh. It needs to be mentioned that as of June 11, Rs.736 crore has been disbursed to 35,204 beneficiaries that belong to the MIG category.
19 June 2018
Under the Government of India’s low-cost ‘Housing for All’ scheme, close to 73% of the 26,000 applicants have been considered eligible to enter a lottery for allotment of housing. The Pune Municipal Corporation (PMC) has given a months time for the remaining 7,000 invalid applicants to get their documents in order to be eligible for the lottery under the Pradhan Mantri Awas Yojana (PMAY) scheme. Applicants were told to produce appropriate details; however, many applications had documents missing or with incomplete details.
Applicants can check the list of valid and invalid documents on the PMC website - if found invalid, applicants are expected to complete the process at the earliest. As for those with valid applications, they need not do anything for now. The final list of beneficiaries of the affordable housing scheme under the PMAY will be announced after the lottery. The list includes applicants for those housing projects under the public-private partnership basis.
5 April 2018
In a good news to women home buyers across the country, it has been found that a number of banks are offering special interest rates in an effort to encourage more and more women to purchase homes. It is mandatory under the Pradhan Mantri Awas Yojana (PMAY) for the property to be registered in the name of a female owner. There has been a 6% rise in the number of women home loan applicants under PMAY.
Not just this, to offer more support to women, an extra stamp duty concession is also being given to women if the property is registered under a female name. Many well-known banks are offering special interest rates exclusively for women. On the whole, a woman who is applying for a loan can get a discount in interest rate of up to 0.05% per annum when compared to men.
Banks such as SBI, HDFC and SBI offer special home loan interest rates for women. As far as PMAY is concerned, the total subsidy that can be claimed adds up to Rs.2.67 lakh. Under the PMAY scheme, the aim is to encourage women to own property and this, in turn, will help them become more empowered. Subsidies will be provided under this scheme for all home loan applications made by women borrowers.
13 March 2018
A total of 2,292 houses will be constructed by the Tamil Nadu Slum Clearance Board (TNSCB) at Manali New Town, North Chennai, to provide shelter to slum dwellers living in the area.
The board has received more than 10,000 applications for these units and it is currently in the process of selecting those candidates who are really in need of new houses.
These houses will be constructed under the Affordable Housing in Partnership (AHP) component of the PMAY scheme, and eligible candidates receive financial assistance from the Central and State Government. While the Central assistance will be of Rs.1.5 lakh, the State’s contribution is yet to be known.
It is expected that these houses will improve the standards of living, although many previous projects undertaken by TNSCB have failed to deliver on the quality aspect.
5 March 2018
The Government of Jammu and Kashmir is going to prepare a new list of the homeless individuals in the state. This announcement was made my Abdul Haq Khan, the Rural Development Minister.
This particular list of homeless individuals is being prepared under the PMAY or Pradhan Mantri Awas Yojana aiming to provide housing for all by 2022. Abdul Haq Khan made the announcement after inaugurating the first construction project under PMAY in Samba. The Housing for All by 2022 scheme under the Pradhan Mantri Awas Yojana was introduced in the year 2015 for making homes affordable for individuals belonging to Economically Weaker Section (EWS), Low Income Group (LIG), and Middle Income Group (MIG 1 & 2).
2 March 2018
Finance Minister Arun Jaitley presented the Budget for the FY 2018-19 in the Parliament on Thursday, where he stressed that every poor person will have a house by 2022, as per the government’s Pradhan Mantri Awas Yojana scheme.
The government’s plan is to construct 51 lakh houses in rural areas and 37 lakh houses in urban, by the end of FY 18-19. To achieve these targets, a dedicated housing fund will be established under the National Housing Bank (NHB) for priority sector lending.
7 February 2018
Government is now bringing forward the youth to conduct social audits. Prior to this, social audits have been conducted by NGOs. Youngsters will conduct these audits to ensure if the PMAY (Pradhan Mantri Awas Yojana) schemes have been executed appropriately.
Karamjit Singh, a social audit expert said, “Earlier, the audit was conducted by NGOs empanelled by the government, but since the results were not satisfactory, the previous Centre government decided that instead of outsourcing the audit to NGOs, it should be conducted by teams formed by the government directly. As a result, the social audit, lasting around three months, was conducted by the youths for the first time in the state last year.”
31 January 2018
The housing ministry is looking forward for an increase in the budget for PMAY in the upcoming union budget. There is speculation that the PMAY will receive a 12% climb in the allocation amount. The housing ministry is also expecting that the central government permits them to obtain a loan of Rs.25,000 crore to live by their target of building 20 lakh homes during the year 2018 – 2019.Along with an increase in the budget for PMAY, the housing ministry is also expecting an increase in the budget for Smart City Schemes, aimed at improving a city’s infrastructure. It is expected that the budget will provide them with a 20% hike towards the same.
30 January 2018
The Chhattisgarh government authorised the construction of 621 housing units, as per the Pradhan Mantri Awas Yojana - Gramin (PMAY- G) in Achanakmar Tiger Reserve. These units are meant for the people of 19 villages who are currently residing in the area.
This is despite the fact that these inhabitants are to be moved to other locations, considering that they are living in the core zones of the reserve. Six of the 25 villages in the reserve were shifted in 2013 when the sanctuary was declared a tiger reserve in 2009. The remaining 19 are yet to be relocated.
The Chhattisgarh High Court recently issued a notice to the State Government on the same. The decision to construct the housing units inside the reserve has been perceived as ironical by many, given that sooner or later, these people will be moved somewhere outside the reserve. As a result, the construction of these houses would amount to wastage of money.
23 January 2018
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