Ever since an individual is a child, one of the biggest dreams they have is to live in a house of their own. In India, the property boom has meant that we have many, many housing options to choose from. However, affordability still remains a concern for the millions of Indian individuals and families who don’t have an income which allows them to freely apply for a home loan.
This is where the Pradhan Mantri Awas Yojana helps. Started in June 2015, the PMAY has been instrumental in empowering millions of Indians to fulfil their lifelong dream of owning a house.
How so, you ask?
Well, under the PMAY, there is a Credit Linked Subsidy Scheme which effectively reduces the EMI that a home loan borrower has to pay the financial institution. This means that an eligible home loan seeker can apply for the interest subsidy under the scheme, get approved, receive the subsidy upfront in form of reduced EMIs, making it considerably more affordable to construct or buy a house through a home loan.
Who is eligible for benefits under the PMAY?
The PMAY has certain criteria that one must meet in order to qualify for the benefits offered through the CLSS. Following are the criteria:
- A household whose annual income is between ₹3,00,000- ₹18,00,000 can apply for the scheme.
- The primary applicant or any of their family members must not own any other ‘pucca’ house in India.
- Applicants must not have benefitted from any other state/central housing scheme before applying under the PMAY.
How much interest subsidy will I get?
If you meet the eligibility criteria for PMAY, the interest subsidy you receive will depend on the income group you belong to. Here are the three income groups that qualify for benefits under the PMAY, and the interest subsidy offered for each:
- Economically Weaker Section (EWS)/ Lower Income Groups (LIG) can get an interest subsidy of 6.5%, provided the house which is being constructed or bought does not exceed carpet area of 60 sq.m.
- The Middle-Income Group 1 category can get an interest subsidy of 4%, provided the house which is being constructed or bought does not exceed carpet area of 160 sq.m.
- The Middle-Income Group 2 category can get an interest subsidy of 3%, provided the house which is being constructed or bought does not exceed carpet area of 200 sq.m.
To know the interest subsidy you can get, you can use the PMAY subsidy calculator. You need to know the income category you belong to, the principal home loan amount, home loan tenure, and the interest rate. On submitting those details, you will know the potential interest subsidy you can get.
How do I claim the interest subsidy?
The Indian Government has appointed three central nodal agencies – the Housing & Urban Development Corporation (HUDCO), National Housing Bank (NHB), and State Bank of India (SBI) – to pay the interest rate subsidy for home loans under PMAY.
The process to claim the interest subsidy involves the following steps:
- The lender sends the borrower’s information to the central nodal agency.
- The agency validates the borrower’s eligibility based on their application form.
- The lender receives the interest subsidy from the government.
- The home loan account is credited with the amount.
With all stakeholders in the loop, the process to claim the interest subsidy is smooth!