‘Roti, Kapda aur Makan‘ ( food, clothes and shelter) are basic requirements for an individual to survive. It is a known fact that most of us would like to own a home. Owning a home is one of the cherished dreams for many of us.
But due to high land prices and high cost of construction, an average Indian always feels short of funds for his dream home when he ventures into the property market. So, home loan is the only preferred option for a majority of home buyers.
The eligibility to get a home loan is mostly dependent on the income levels. So, if your income is very less (salaried or self-employed), it is very tough to get a home loan from a lending institution or a bank.
There is no need to mention separately about families falling under LIG (Low income group) or EWS (Economically Weaker Section). They just cant afford to buy a home.
To ensure that families (who live in urban areas) get a affordable housing solution, the central govt has launched a scheme called Pradhan Mantri Awas Yojana (PMAY – Urban) in May, 2015.
Objectives of Pradhan Mantri Awas Yojana (Urban)
The main objectives of PMAY Sc heme are;
- Rehabilitation of existing slum dwellers
- Promotion of ‘Affordable Housing’ for weaker section through credit linked subsidy (Home loan subsidy)
- Affordable housing through public-private partnerships
- Subsidy for beneficiary-led individual house construction or house enhancement or renovation
PMAY – Features & Eligibility rules
Below are the eligibility rules and key features of the scheme;
- Who can apply for Pradhan Mantri Awas Yojana scheme? – A beneficiary under PMAY has been defined as:
- A family comprising of husband, wife and unmarried children
- Beneficiary should not own a pucca house either in their name or in the name of any member of their family in any part of India to receive central assistance under the Mission &
- Meeting income criteria defined under the scheme.
- What are the income norms (criteria)? Who is eligible for PMAY? – The income norms for EWS / LIG categories are defined as follows:
- EWS households with an annual income up to Rs. 3 Lakh.
- LIG households with an annual income between Rs. 3 Lakh to Rs. 6 Lakh.
- Middle Income Groups (MIG) which fall under the bracket of annual incomes of above Rs 6 lakhs to Rs 18 lakhs are eligible for interest subsidy on housing loans under the new Credit Linked Subsidy Scheme (CLSS). (latest update : 24-March-2017). People whose housing loans have been approved and whose applications are under consideration since January 1,2017 are eligible for subsidy under MIG – CLSS.
- Eligibility criteria under MIG – I group are : Household income range – Rs 6 Lakh to 12 Lakh, maximum carpet area
90 Sq mt / 970 Sq ftincreased to 120 Sq mt (1292 sq ft), Maximum loan tenure – 20 years, Maximum interest subsidy – Rs 2.35 Lakh (4%). (Updated on 17-Nov-2017)
- Eligibility criteria under MIG – II group are : Household income range – Rs 12 Lakh to 18 Lakh, maximum carpet area
110 Sq mt / 1190 Sq ftnow has been increased to 150 sq mt (1614 sq ft), Maximum loan tenure – 20 years, Maximum interest subsidy – Rs 2.3 Lakh (3%). (Updated on 17-Nov-2017)
- Latest Update (22-Sep-2017) : Interest subsidy scheme on home loans under MIG category has been extended from 31st Dect, 2017 to 31st March, 2019.
- Eligibility criteria under MIG – I group are : Household income range – Rs 6 Lakh to 12 Lakh, maximum carpet area
- What is Credit Linked Subsidy Scheme? – One of the main aims of PMAY is to provide subsidy on home loans taken under this scheme. Below are few details about the subsidy scheme;
- If the loan amount is less than Rs 6 Lakh then interest rate on loan is charged at 6.5% to the beneficiary. To avail this subsidy, the loan tenure has to be less than or equal to 15 years.
- If the loan amount is more than Rs 6 Lakh, the interest rate of 6.5% is applicable on loan amount of up to Rs 6 Lakh and the remaining balance loan amount will be subject to normal prevailing market rates. For example : If you apply for home loan under PMAY scheme for Rs 10 Lakh, up to Rs 6 Lakh the interest rate is charged at 6.5% and the balance Rs 4 Lakh is charged at prevailing interest rates by your bank or lending institution.
- If home loan amount is up to Rs.9 lakhs then the beneficiary will get home loan interest subvention / rebate of 4% per annum. This means if the prevailing interest rate is 10% then the home loan will be provided at 6% interest rate. (updated on 02-Jan-2017)
- Similarly, if the home loan amount taken in 2017 is up to Rs.12 lakhs then the beneficiary will get home loan interest subvention of 3% per annum. This means if the prevailing interest rate is 10% then the home loan will be provided at 7% interest rate.
- In villages, those wanting to build or expand their homes will get loans of up to 2 lakh, with a 3% interest relief.
- How much subsidy will I get? –
- It would be computed at a rate of interest of 6.5% p.a on a maximum loan amount of Rs. 6 Lakh or the loan amount whichever is lower, for 15 years tenure with discounting rate of 9%.
- For 6 Lakh the interest subsidy comes to around Rs. 2,20,000.
- Hence an upfront subsidy of Rs. 2,20,000 would be claimed by your bank from NHB (National Housing Bank) and the same would be adjusted against the outstanding amount in your Loan Account.
- The loan outstanding would reduce and result in lower EMI of approximately Rs. 2,000 for you. (Kindly click on the below image to calculate your subsidy amount.)
- Illustration – If you avail a loan for Rs. 8 Lakh then the maximum subsidy works out to Rs. 2,20,000. The amount Rs. 2,20,000 would be reduced upfront from your loan account (i.e., the loan would reduce to Rs. 5,80,000) and you would pay EMIs on the reduced amount of Rs. 5,80,000 only. (Kindly note that 6.5% is the rate of interest up to Rs 6 Lakh & prevailing rate is charged for the remaining Rs 2 Lakh.)
- Do I have to give any additional documents to avail this subsidy? – No, there is no additional documents except a Declaration of not owning a pucca house. If you do not have any income proof then you are required require to submit an Affidavit.
- What is the rate of interest on home loan under PMAY? – As mentioned above, the rate of interest is 6.5% for the loans up to Rs 6 Lakh. Any amount which is over and above this limit will be subject to normal market interest rates.
- Should I buy a house which is provided under PMAY only? – The Govt is planning to build around 2 crores of affordable houses by 2022 in a phased manner. You can apply for a house which is provided under this scheme (or) you can buy a house from a project (pvt) where 30% of affordable houses in the project are ear-marked for EWS category (or) you can build your own house or renovate the existing house.
- What is the maximum loan amount that I can apply? – As such, there is no loan amount limit under this category of loans.
- I have one own house. Can I apply for second house under PMAY? – No, you can not apply for this scheme.
Latest News (25-Jan-2018) : GST for homes purchased under the Credit Linked Subsidy Scheme (CLSS) would be 8% w.e.f 25th January, 2018. For under-construction homes that form a part of CLSS will now be charged GST at 8 percent instead of 12 percent, a cut of 4 percent. However, people who are not eligible for CLSS will continue to pay higher GST.
The concessional rate of GST of 12 percent (effective rate of 8 percent after deducting one-third of the amount charged for the house towards the cost of land) will henceforth (from January 25) be applicable for houses constructed or acquired under the CLSS for Economically Weaker Sections (EWS) / Lower Income Group (LIG) / Middle Income Group-1 (MlG-1) / Middle Income Group-2 (MlG-2) under the Housing for All (Urban) Mission/Pradhan Mantri Awas Yojana (PMAY Urban).
How to apply for PMAY Scheme? How to get Home Loan Subsidy under Awas Yojana?
If you meet the above income norms of EWS / LIG (or) if you are a slum dweller, you can apply through the following modes;
- Govt’s PMAY portal : You can submit online application to buy a house provided under PMAY Scheme in your locality. Below is the procedure;
- Kindly visit PMAY, Govt Portal.
- Click on ‘Citizen Application’.
- Click on ‘Slum dweller’ and submit Format-A application.
- If you belong to EWS or LIG category then click on ‘benefit under 3 components’ and submit Format-B application.
- Kindly save the reference number or application number for future use.
- You can track your application status by clicking on ‘track your application status’.
- You can also search for your name, whether it is in the beneficiary list or not.
- CSC Centre : You can also apply for a house under PMAY at any of your nearest CSC centre (Common Services Centers). Click here to locate a CSC centre. (This facility has been launched on 02-Nov-2016)
- State Land Nodal Agencies : Another option is to apply through any ‘Nodal Agency’ designated by the State Governments for implementing the Mission.
How to apply for Home loan Subsidy under PMAY? (Credit linked Subsidy Scheme)
Let’s say you meet the income norms and other eligibility criteria, have applied for a house under PMAY, and you have been allotted a house. What if you do not have the money to buy the house?
(The States/Union Territories would decide on an upper ceiling on the sale price of EWS houses in rupees per square meter of carpet area in such projects with an objective to make them affordable and accessible to the intended beneficiaries.)
Under such a scenario, you can apply for a home loan under Pradhan Mantri Awas Yojana Scheme and can get the subsidy. You can also apply for a home loan to construct a new house or renovate your existing house.
You can apply for a loan through any Scheduled Commercial Banks (like SBI, ICICI Bank, Canara Bank etc), Housing Finance Companies, Regional Rural Banks (RRBs), State Cooperative Banks, Urban Cooperative Banks or any other institutions as may be identified by the Ministry.
Below is the detailed flow-chart on how the home loan application under PMAY is processed and how the subsidy amount is credited to your loan account (beneficiary account).
(Kindly note that you can avail the subsidy of Rs 1.5 lakh for construction of new houses under the mission. You have to approach your Urban Local Body to avail the subsidy. Families belonging to EWS categories are eligible for this assistance.)
My Opinion : If the houses provided under this scheme are of good quality with the basic amenities, and if the subsidy amounts are claimed by the deserving families then Pradhan Mantri Awas Yojana can be a successful scheme and the mission of ‘housing for all’ in urban areas can be accomplished in the next few years.
Latest news (31-December-2016) : PM Narendra Modi announces new Housing Schemes with rebates/discounts on Home Loan interest rates under Pradhan Mantri Awas Yojana (PMAY). Two new middle income categories have been created under the Pradhan Mantri Awaas Yojana in urban areas. Home loans of up to 9 lakhs, will get a 4% interest benefit. For home loans of up to 12 lakhs, an interest rate waiver of 3% will be provided. In villages, those wanting to build or expand their homes will get loans of up to 2 lakh, with a 3% interest relief.
Latest update (22-June-2017) : EPFO (Employees Provident Fund Org) & HUDCO (Housing & Urban Development Corp) plan to tie up for providing housing subsidy to members of EPF Scheme, under PMAY. As per the recent notification, EPFO now allows its subscribers who want to buy a house property from Housing Societies / Agencies to withdraw up to 90% of their EPF accumulations to buy homes.
(Reference & source : Ministry of Housing & Urban Poverty Alleviation, Government of India)
(Image courtesy of atibodyphoto at FreeDigitalPhotos.net) (Post published on : 03-November-2016)