What are the aspects to consider if you want to avail the PMAY scheme either on existing home loan or a new one? Who is eligible for the PMAY scheme? How does it help you in building your home? These are the questions that come in the mind of the commoner. The Credit Linked Subsidy Scheme (CLSS) for the low-income group and two groups of the Middle-Income population namely MIG I and II which was initially implemented in 2017 is extended up to 31.03.20. In this article, we discuss the eligibility, restrictions, subsidy amount and all other tenets of the PMAY scheme which would make you more informed and make your home buying a seamless experience.
PMAY Scheme -Whom is it meant for?
The PMAY scheme has been floated mainly for the economically weaker sections (EWS) of the society divided into the low-income group (LIG) and the middle-income group (MIG) individuals. The LIG constitutes of individuals within Rs. 3 lakhs and Rs. 6 lakhs of annual income and Middle Income Group (MIG) constitutes of people earning up to Rs. 12 lakhs and Rs. 18 lakhs annually.
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The carpet area for the LIG category under the PMAY scheme is 30 square meters for homes in the four metros and for the rest of the country, the area stipulated is up to 60 square meters. For the individuals in the MIG I category earning up to Rs. 12 lakhs per annum, the revised carpet area stipulated is 120 square meters and for MIG II category with an income up to Rs. 18 lakhs, it is 150 square meters. The area stipulated is in carpet area and you just need to add 30% to 50% more to come to the built-up area as stated by the developers. The beneficiary of the PMAY scheme may build a larger house or of a bigger dimension but the subvention of interest would be limited according to the income level.
What Comprises of a Household?
An adult earning member of a family is treated as per the PMAY Housing Scheme as an eligible beneficiary but he or she should not own a pucca house and the beneficiary family or any of its members should not have availed earlier any central assistance for housing under any scheme of the Government of India. The beneficiary family members should submit their Aadhar numbers for the application of the loan. This means that children living with their parents or on rent can opt for assistance under PMAY scheme provided they do not have their own home. A married couple either living with their parents or on rent would be treated as a separate household under the scheme. They would be eligible for a single home bought by either of the spouses or by both on joint ownership.
Eligibility Criteria for PMAY scheme
i) The person or the beneficiary who applies for the PMAY assistance should not already own a pucca house either in his name or in the name of any of the members of the family. Family in this sense would include the spouse and unmarried sons or daughters. If he or she has an ancestral home inhabited by the parents, it would not be considered as a home owned by him or her.
ii) The income level should be within Rs. 6 lakhs to be considered as LIG and within Rs. 18 lakhs to be considered as MIG.
iii) For qualification under the PMAY scheme, the house constructed or bought has to fall within the definition of affordable housing. The Ministry of Housing and Urban Poverty Alleviation issued guidelines on March 2016 which states a housing complex where 35% of the houses are constructed for the EWS category would be considered as an affordable housing project. If someone wishes to buy a posh house where there is no allocation towards affordable housing, the PMAY scheme won’t be applicable.
PMAY Subsidy
A 6.5% subsidized rate of interest would be applicable irrespective of the loan amount taken by the borrower and it would be applicable to the amount only up to Rs. 6 lakhs. Any additional loan amount above the limit of Rs. 6 lakhs would be charged at the non-subsidized rate or the standard rate of the bank. The interest subsidy would be directly credited to the bank or the loan account of the beneficiary resulting in a payment of just 2.5% by the borrower if the interest on the home loan is 9%.
A subsidy of 2.3 lakhs would be paid to the loan account of the borrower and he or she would have to pay EMIs on the reduced amount of principal. For instance, if the borrower has taken a loan of Rs. 6 lakhs it would be reduced to Rs. 3.7 lakhs and the EMIs would have to be paid on the reduced principal amount. Individuals earning up to Rs. 12 lakhs per annum would be entitled to get a 4% interest subsidy on the principal amount of Rs. 9 lakhs. Individuals earning Rs. 12 lakhs to Rs. 18 lakhs annually would be entitled to receive an interest subsidy of 3% on a principal amount of Rs. 12 lakhs. The PMAY scheme would apply for a maximum tenure of up to 20 years.
How would you Avail the Loan?
The loan under the PMAY scheme has to be applied to any bank or a housing finance company with a self-certificate or an affidavit as a proof of identification as a EWS category or a LIG beneficiary. Unlike other normal loans from banks, if the borrower wishes to transfer the balance to another bank or financial institution, the beneficiary would not be eligible to claim the benefit of subvention of interest under the PMAY scheme.
Key Takeaways for PMAY Scheme
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