Pradhan Mantri Awas Yojana: If you are thinking of buying a new house and have a low budget, then you can buy a house cheaply under the Pradhan Mantri Awas Yojana. Let us know in the news below who can take advantage of this scheme and who cannot.
If you are planning to buy a house then Pradhan Mantri Awas Yojana (PMAY) can make your work easier. Earlier the benefit of PMAY was only for the poor class. Now by increasing the amount of home loan, the poor and middle class of urban areas have also been brought under the ambit of PMAY.
According to the initial provisions, the home loan amount under PMAY was Rs 3 to 6 lakh, on which interest subsidy was given under PMAY. Now it has been increased to Rs 18 lakh. Let us know what are the necessary conditions for the application of Pradhan Mantri Awas Yojana (PMAY)?
Who can avail the benefits of PMAY?
To avail the benefits of PMAY, the age of the applicant should be 21 to 55 years. However, if the head of the family or the applicant is above 50 years of age, his principal legal heir will be included in the home loan.
What should be the income to avail PMAY benefits?
For EWS (low economic class) the annual household income is fixed at Rs 3.00 lakh. For LIG (Low Income Group) the annual income should be between Rs 3 lakh to Rs 6 lakh. People with annual income up to Rs 12 and Rs 18 lakh can also avail the benefits of PMAY.
Salary certificate, Form 16, or Income Tax Return (ITR) for salaried people
For self-employed people, an affidavit can be submitted as income certificate for annual income up to Rs 2.50 lakh. If the annual income is more than Rs 2.50 lakh then it is necessary to submit proper proof of income.
How much subsidy will be given in PMAY?
Credit linked subsidy of 6.5 percent is available only on loans up to Rs 6 lakh.
People with annual income up to Rs 12 lakh will be able to avail four percent interest subsidy on loans up to Rs 9 lakh.
Similarly, people with annual income up to Rs 18 lakh will be able to avail three percent interest subsidy on loans up to Rs 12 lakh.
Amount of government subsidy under PMAY
There will be no difference in the amount of interest (actual and subsidized) in PMAY Loan Subsidy. This will be the Net Present Value (NPV) of the interest subsidy amount.
Amount of interest subsidy according to annual income
This will be calculated at a discount rate of nine percent. To calculate the NPV of a subsidy, you need to consider the amount paid for the loan and the amount of interest paid in each monthly instalment.
The amount of subsidy in PMAY reduces your loan amount and thus the interest burden on you gets reduced.
How will interest subsidy be calculated in PMAY?
- Let us assume that the annual income of a person taking a loan is Rs 6 lakh.
- (Maximum loan amount Rs 6 lakh: Subsidy: 6.5 per cent)
- Actual loan amount: Rs 6 lakh
- Interest rate: 9 per cent
- Monthly Installment: Rs 5,398
- Total interest in 20 years: Rs 6.95 lakh
- Your interest subsidy as per 6.5 per cent subsidy After this the NPV will be Rs 2,67,000.
- The government is providing this interest subsidy to the people. Accordingly, your PMAY loan actually becomes Rs 3.33 lakh instead of Rs 6 lakh.
How much will be the benefit in PMAY?
Keep in mind that the borrower has taken the loan at the rate of nine percent per annum. This reduces because the interest subsidy amount is already credited to the borrower’s account.
Its effect is visible in the form of reduced monthly installment and less burden of interest.
Revised loan amount: Rs 3.33 lakh
Interest rate: 9 percent
Monthly installment: Rs 2,996
Total interest to be paid in 20 years: Rs 3.86 lakh
Saving in monthly installment: Rs 2,402
Total interest saving: Rs 3, 08,939
How to get the benefit of PMAY subsidy?
Talk to the home loan institution about subsidies.
If you are eligible then your application will first be sent to the Central Nodal Agency.
If approved, the agency will give the subsidy amount to the lending bank.
This amount will come to your loan account.
If your annual income is Rs 7 lakh and loan amount is Rs 9 lakh, then your subsidy will be Rs 2.35 lakh.
After deducting this, your loan amount will be Rs 6.65 lakh. You will pay monthly installments on this amount.
If the loan amount exceeds your subsidy eligibility, you will have to pay interest on the excess amount at the normal rate.
What precautions should be taken in PMAY?
In fact, the interest rates on home loans can be different from nine percent.
At present, home loan rates based on MCLR are around 8.5 percent.
Because of this the interest rate and monthly installments may reduce.
Check the eligibility issues to avail the benefits of PMAY.
If there is a permanent house anywhere in the country in the name of you, your spouse or child, then you cannot avail the benefit of PMAY.
