Pradhan Mantri Shri Narendra Modi has given New Year sops to several sectors including farmers, senior citizens, medium and small scale enterprises and people with low income. He has extended the benefits on home loan interest to the people with lower incomes by providing rebates of up to 4 percent on home loan taken under Pradhan Mantr Awas Yojana. Let’s go through with the highlights of the scheme and the new rebates announced by PM on New Year’s Eve.
What is Pradhan Mantri Awas Yojana (PMAY Urban)?
“Housing for All by 2022” – To ensure that families belongs to lower income groups (LIG) and Economically Weaker Sections (EWS) shall get shelter by 2022, Government of India has launched a scheme “Pradhan Mantri Awas Yojana” in which home loan is provided to the LIG and EWS at concessional rate of interest of 6.5 percent per annum for tenure up to 15 years.
Objectives of Pradhan Mantri Awas Yojana
Eligibility Criteria for Pradhan Mantri Awas Yojana (PMAY Urban)
There are few criteria which one should met to be eligible for concessional home loan under PMAY.
- Beneficiary should not own a pucca house either in his/her own name or in the name of any of his/her family member in any part of India. In simple terms the beneficiary should be first time home buyer. Here family members comprise husband, wife and unmarried children.
- Pradhan Mantri Awas Yojana is for lower income groups (LIG) and Economic Weaker Sections (EWS) people. To be eligible for PMAY Income in case of EWS should not exceed Rs.3 lakhs per annum while in case of LIG income should not exceed Rs.6 lakhs per annum.
- The carpet area of houses being constructed under Pradhan Mantri Awas Yojana should be up to 30 square metres of EWS and 60 square metres LIG category. Further, the loan could be for buying, constructing or renovating of house including addition of rooms, kitchen, toilet etc. to existing dwellings as incremental housing.
Thus if your income is less than Rs.6 lakh per annum and you are married and residing with your parents then you are eligible for home loan at concessional rate under pradhan mantri awas yojana.
Credit Linked Subsidy or Rebates on Home Loan Interest (UPDATED)
There are three criteria under which one can avail benefit of home loan interest.
- Loan Amount up to 6 lakhs: If the Home Loan amount is up to Rs.6 lakhs then interest on home loan will be charged at concessional rate of 6.5 percent per annum. Here the rate of interest is fixed at 6.5 percent per annum i.e. no effect of RBI rate cut or hike is going to impact the interest amount or EMI.
- Loan Amount up to 9 lakhs taken in 2017 (NEW): If home loan amount is up to Rs.9 lakhs then the beneficiary will get home loan interest subvention of 4 percent per annum. This means if the prevailing interest rate is 9% then the home loan will be provided at 5% interest rate.
- Loan Amount up to 12 lakhs taken in 2017 (NEW): Similarly, if the home loan amount is up to Rs.12 lakhs then the beneficiary will get home loan interest subvention of 4 percent per annum. This means if the prevailing interest rate is 9% then the home loan will be provided at 6% interest rate.
- Rural Areas: Government has also sanctioned interest subvention of 3 percent for the neo middle and middle class in rural areas for loans of up to Rs.2 lakh taken in 2017, for new housing or extension of housing in rural areas.
In all the above cases, few conditions remain constant which are as follows:
- The tenure of the home loan shall be maximum of 15 years and no default is to be made from the beneficiary side to avail the subsidy benefit.
- In case the home loan amount exceeds R.12 lakhs then the reduced interest rate shall be applicable only up to Rs.12 lakhs and on remaining loan amount prevailing interest rate shall be applied.
- Illustration: If home loan of Rs.15 lakhs is taken at 9% interest rate for tenure of 15 years then the interest subsidy of 3% would be applied on Rs.12 lakhs and on remaining Rs.3 lakhs interest rate of 9% is applicable. The subsidy would be credited upfront to the beneficiary loan account resulting in reduced EMI.
Subsidy Amount Calculation under Pradhan Mantri Awas Yojana
How to Apply for Pradhan Mantri Awas Yojana
If you fulfill the above criteria of PMAY, then kindly visit PMAY site and submit application in Format-A if you are slum dweller or in Format-B if you belong to EWS or LIG category. You will be given a reference number once you submit the application for future reference. You can also track whether you will be awarded a house under PMAY or not.
You can also visit Common Service centers (click here to locate CSC center nearest to you) or can apply through any ‘State Land Nodal Agency’ designated by the State Governments for implementing the Mission.
Once you are allotted a house under PMAY you can choose to avail subsidized home loan through any Scheduled Commercial Banks (like SBI, BOB, PNB, ICICI Bank etc.), Regional Rural Banks (RRBs), Housing Finance Companies, Urban Cooperative Banks, State Cooperative Banks or any other institutions as may be identified by the Ministry.