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Pradhan Mantri Awas Yojna (PMAY) Scheme Explained

Pradhan Mantri Awas Yojna (PMAY) is a scheme launched by the GOI for the people in below middle income group to help on Housing. Know more on this program and how you could apply?

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Pradhan Mantri Awas Yojna (PMAY) is a scheme launched by the Government of India to provide affordable housing to the economically weaker section (EWS), Low income group (LIG), and Middle Income Group (MIG)). The Credit Linked Subsidy Scheme( CLSS) provides subsided interest rates to those who are eligible for this scheme. The aim of the scheme is to achieve the target of ‘Housing for all’ by 31 March 2022.

CLSS for EWS and LIG

One of the key objectives of CLSS is to provide housing for the urban poor. The urban poor is divided into two groups, EWS ( with an income of Rs 0- Rs 3,00,000) per annum, and LIG ( with an income of Rs 3,00,000- Rs 3,00,000 per annum). These groups are eligible for an interest subsidy of 6.5 per cent. For this, the unit constructed or purchased should be 60 square meters or less in carpet area. The maximum loan amount is limited to Rs 6 lakh over a home loan for a period of 20 years. The maximum interest subsidy amount is Rs 2,67,280.

CLSS for MIG 1

MIG is defined as those who have a household income between Rs 6 lakh to Rs 12 lakh per annum. This group is eligible for an interest subsidy of 4 per cent. For this, the carpet area of the unit constructed or purchased should not exceed 160 square meters. The maximum loan amount is limited to Rs 9 lakh for a home loan of a period of 20 years. The maximum interest subsidy amount is 2,35,068.

CLSS for MIG 2

MIG 2 is defined as the category whose annual income is between Rs 12 lakh and Rs 18 lakh per annum. This group is eligible for an interest subsidy of 3 per cent. For this, the unit constructed or purchased should not exceed 200 square meters in size. The maximum loan amount is limited to Rs 12 lakh for a home loan of 20 years. The maximum interest subsidy amount is 2,30,156.

Eligibility for PMAY scheme

To be eligible for the PMAY scheme one needs to fulfil certain eligibility criteria. These are:

  1. The beneficiary family should not own a pucca house in the name of the beneficiary or a family member in any part of India
  2. For married couples, either of the spouses or both the spouses jointly will be eligible for a single subsidy.
  3. The beneficiary family should not have availed the benefits of any other housing scheme by the central government

How to apply

Here is how to apply for the PMAY scheme:

  1. Check whether you are eligible to apply for the scheme. For checking whether you are eligible, you can visit the https://pmaymis.gov.in/ site
  2. If you meet the eligibility criteria, approach a bank or financial institution that is participating in the scheme.
  3. Fill up the CLSS subsidy form and submit it to the lender along with relevant documents.
  4. Once the documents are verified, the loan will be disbursed to your account.
  5. After this, the lender will get in touch with the required authorities and the process of claiming the interest subsidy will be initiated.
  6. Once the verification is done, the subsidy will be credited to your loan account. Your loan amount will then be adjusted accordingly with a lower EMI.

If you are an existing home loan borrower

Existing home loan borrowers can avail this scheme if they fulfil all the required criteria.

Things to note

There are a few more things to note about the PMAY subsidy. The interest subsidy is available for a maximum loan tenure of 20 years or lower. The interest subsidy is credited upfront to the loan account of the borrower, resulting in a lower EMI. For additional borrowings beyond the specified limit, no interest subsidy is available. Further, there is no upper limit on the loan amount or the cost of the property.

The PMAY scheme is a significant initiative to provide affordable housing for the masses. Check if you are eligible to claim the benefits of the interest subsidy.

Quick Facts

  • Around the world, housing is regarded as a means of long term wealth accumulation and financial stability.
  • India's growing population of 1.4 billion (as on 23rd Nov 2020) people living in an area of 32,87,263 square kilometers. The density of population works out to ~426 persons per square kilometer
  • Only ~45%* of the housing in India are considered as good per certain standards.
  • The demand for new housing is increasing everyday.