Pradhan Mantri Awas Yojana: All You Need To Know

Why You Should Know About Pradhan Mantri Awas Yojana

Housing is one of the three basic needs of human beings. Each one of us dreams of having our own house. In last two decades, the trend of taking home loan to finance the own house has seen a phenomenal growth. No doubt, home loan has made the dream of lakhs of people a reality. And, if you are also one of those, who have finalized their dream home, this article will be of great help to you. Pradhan Mantri Awas Yojana or PMAY can save you some lakhs of rupees if you plan to buy house with home loan.

What Is Pradhan Mantri Awas Yojana

Pradhan Mantri Awas Yojana has two types- Rural & Urban. The aim of this scheme is to help people throughout the country to buy or build their own house. This is part of the goal of ‘Housing for All’ set by the government. Pradhan Mantri Awas Yojana (Urban) is a Credit Linked Subsidy Scheme for Lower Income Group (LIG) & Middle Income Group (MIG) in urban areas. Under this scheme, people can avail subsidies on home loans. Earlier its deadline was 31st December 2017, but now the PMAY is extended the period to 31st March, 2019.

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Who Comes Under Pradhan Mantri Awas Yojana

All those persons, whose annual income is up to Rs. 18 lakh, are eligible to take the benefit of Pradhan Mantri Awas Yojana. But there are some terms and conditions, which one has to fulfill.

  1. It should be your first house. Nowhere in the country, any pucca house should be in your name, either individually or joint.
  2. You will get the benefit in the form of interest subsidies of around Rs. 2.5 lakh.
  3. There are 2 categories in the middle income group i.e. MIG 1 & MIG 2. MIG 1 is for those whose household income is between Rs. 6-12 lakh. MIG 2 is for those whose income is between Rs. 12-18 lakh. Lower Income Group scheme is for those persons whose income is up to Rs. 6 lakh.

Quantum OF Benefits In Pradhan Mantri Awas Yojana

For three categories, i.e. LIG, MIG 1 & MIG 2, the scheme has different set of benefits. I will explain these one by one by three tables. Let’s start from Lower Income Group or LIG.

(1) PMAY Benefit for LIG

Annual Income-                       Up To Rs. 6 lakh

Interest Subsidy-                     6.5%

Maximum Loan Tenure-            20 years

Eligible Loan Amount-              Rs. 6 lakh

Housing Unit’s maximum Size- 60 Sq. Mt. (643 Sq. Ft.)

Net Benefit                             Rs. 2.67 lakh

(2) PMAY Benefit for MIG 1

Annual Income-                       Rs. 6-12 lakh

Interest Subsidy-                     4%

Maximum Loan Tenure-            20 years

Eligible Loan Amount-              Rs. 9 lakh

Housing Unit’s maximum Size- 90 Sq. Mt.  (965 Sq. Ft.)

Net Benefit                             Rs. 2.35 lakh

(2) PMAY Benefit for MIG 2

Annual Income-                       Rs. 12-18 lakh

Interest Subsidy-                     3%

Maximum Loan Tenure-            20 years

Eligible Loan Amount-              Rs. 12 lakh

Housing Unit’s maximum Size- 110 Sq. Mt.  (1184 Sq. Ft.)

Net Benefit                             Rs. 2.30 lakh

How Will The Benefit Be Calculated In Pradhan Mantri Awas Yojana

You will not get cash benefit. The benefit will be provided to you upfront in the form of net present value of the same. For LIG people, the net benefit i.e. Rs. 2.67 lakh will be reduced from the loan amount. And, you will have to pay the EMI on this reduced loan amount. The Pradhan Mantri Awas Yojana lowers the EMI roughly by around 2,000 per month.

The housing unit’s maximum size is carpet area. It means that for 643 Sq.Ft. carpet area, the built up area of the housing unit will be between 900 to 1,000 Sq. Ft. Similarly, 965 Sq.Ft. carpet area means built up area of 1,400 to 1,500 Sq.Ft. And, 1,184 Sq.Ft. carpet area means built up area of 1,700 to 1,800 Sq.Ft.

If your loan amount exceeds the eligible limit in Pradhan Mantri Awas Yojana, you will get subsidy only on the eligible amount. Rest of the loan amount will have the prevailing interest rate in the market.

Also read: Maths behind the home loan festival schemes

Also, if an MIG 1 person wants to buy a house larger than 965 Sq. Ft., he can still avail the benefit but under the MIG 2 category. It means he will get 3% interest subsidy on Rs. 9 lakh.

Even if borrower wants to exit after some time, say after three or six months from the time he takes the loan, he will still get the benefit. He will have to pay the outstanding amount after adjusting for the benefits given by the government.

 Pradhan Mantri Awas Yojana_details

Details of Pradhan Mantri Awas Yojana

How to apply In Pradhan Mantri Awas Yojana

You can apply for a home loan under Pradhan Mantri Awas Yojana from listed primary lending institutes (PLIs). You can find the list of PLIs here. Apart from the common loan application documents, no additional documents are required. Remember that, you will have to submit a self-declaration of not owning a pucca house, in the described format.

In the nutshell, you should remember the following points about Pradhan Mantri Awas Yojana:-

  1. Benefit under Pradhan Mantri Awas Yojana can be availed only by first time home buyers.
  2. Beneficiary family means husband, wife and unmarried children. The beneficiary family should not have any house in any part of the country.
  3. Additional loan (i.e. more than the eligible limit for any category) will be at non-subsidised rate.
  4. Home loans can be applied as usual with banks or housing finance companies.
  5. Subsidy will be credited to the loan amount and EMI will be reduced.
  6. Subsidy will be calculated for loan term of maximum 20 years.

I believe that this article would have helped you to understand the Pradhan Mantri Awas Yojana completely. If you have any question, confusion or suggestion, you are welcome to ask.

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