The Pradhan Mantri Awas Yojana is a flagship programme of the Indian government that aims to provide a pucca housing unit for all citizens. Read on to know more about how this programme works?
With the rapid influx of migrants to the city from the rural area, there has been a massive increase in the demand for housing units. To bridge this gap, the government of India launched the flagship social welfare programme, the Pradhan Mantri Awas Yojana in 2015. The scheme aims to build more than two crore new affordable housing units across different urban locations in India to accommodate the urban poor who have no place to live or lives in a slum.
Apart from providing new housing units to the eligible beneficiaries, under the PMAY scheme, the government of India under the CLSS (credit linked subsidy scheme) aims to encourage people from low-income group, and middle-income group to purchase a home by providing them subsidy on the home loan interest. The percentage of subsidy you can avail varies based on your income group.
Let us look at how the PMAY subsidy scheme works.
To avail the home loan interest subsidy under the CLSS, the eligible beneficiary must fall into the any of the following income categories:
- EWS (Economically Weaker Section) or LIG (Low-Income Group) with an annual income not exceeding six lakhs.
- MIG – I (Middle Income Group) with an income between six lakhs and 12 lakhs per annum
- MIG – II with an annual income ranging from 12 lakhs to 18 lakh Rupees.
PMAY Subsidy for EWS and LIG
Homebuyers belonging to these categories are eligible to get interest subsidy of 6.5% for a period of the 20 years or the full home loan duration, whichever is lower. If you belong to any of these income groups, you can approach any lending institutions for a home loan. The incentive offered by the government is initially credited to your account by the lender, and then your EMI will be reduced as per the credited value.
The subsidy on the home loan interest rate is not just applicable for buying a new house or construction of a home, but it is also available for a loan taken for home extension purposes. Within the EWS and LIG category, eligible beneficiaries belonging to the SC, ST, and backward classes are eligible for preferential treatment.
PMAY Subsidy for MIG
This category is divided into two sections – MIG I and MIG II. The former includes people whose annual household income ranges from six lakhs to 12 lakhs, whereas, the latter includes people who have a household income in the range of 12 to 18 lakhs per annum. Beneficiaries from MIG I category are subject to get a subsidy of 4% on loan up to Rs. 9 lakhs for 20 years. Whereas, beneficiaries from MIG II group get a subsidy of 3% on loan up to Rs. 12 lakhs for 20 years.
How to Avail PMAY subsidy?
To benefit from the CLSS home loan interest subsidy guaranteed by the PMAY scheme, you must first approach an authorised PMAY lender and submit the subsidy application form along with relevant documents. After verification of your eligibility, the lender will disburse the loan amount directly to your bank account. Once you receive the amount, the lender then approaches the nodal agencies to initiate the process of injecting your bank account with the subsidy (as per your eligibility).
Once the subsidy is processed, the lender will automatically lower your loan EMI as per the applicable subsidy rate.
The Pradhan Mantri Awas Yojana, since its launch in 2015 has benefitted millions of home loan borrowers in India. The scheme is an excellent initiative by the government of India to help people get home loans with secure and flexible terms and become a homeowner.