Pradhan Mantri Awas Yojana – An Initiative Towards Progressive India

If you are planning to buy a house, then the  Pradhan Mantri Awas Yojana (PMAY) can make your work easier. Earlier, the benefit of PMAY was only for the poor. Now, by increasing the amount of home loan, the poor and middle class of urban areas have also been brought under the purview of PMAY. According to the initial provisions, the amount of home loan in PMAY ranged from 3 to 6 lakh rupees, on which interest subsidy was given under PMAY. Now it has been increased to Rupees 18 lakhs. Let us know what the necessary conditions for the application of Pradhan Mantri Awas Yojana are. For more details, kindly visit the government website.

Who can apply for PMAY?

Applicants must be 21 to 55 years of age to avail PMAY. However, if the head of the family or the applicant is over 50 years of age, then his principal legal heir will be included in the home loan. The annual household income for EWS (lower economic class) is fixed at Rupees 3.00 lakh. The annual income for LIG (low income group) should be between 3 lakh to 6 lakh. People with income up to Rupees 12 and 18 lakhs per annum can also avail PMAY.

• Salary certificate, Form 16, or Income Tax Return (ITR) for those getting paid.
• Affidavits can be submitted as income certificates for people doing their work for an annual income of up to Rupees 2.50 lakh. If the annual income is more than Rupees 2.50 lakh, then it is necessary to present proper proof of income.

How much subsidy will be available in PMAY?

PMAY will not be the difference (actual and subsidy received) of subsidy interest on PMAY. This interest will be the net present value (NPV) of the subsidy amount. It will be calculated at a discount rate of nine percent. To calculate the NPV of a subsidy, you need to pay attention to the amount being paid for the loan and the amount of interest in each monthly installment.The amountof subsidy in PMAY reduces your loan amount and thus reduces the interest burden on you.

• A 6.5 percent credit linked subsidy is available only on loans up to Rupees 6 lakh.
• People earning up to Rupees 12 lakh per annum will be able to avail four per cent interest subsidy on loans up to Rupees 9 lakh.
• Similarly, people earning an annual income of up to Rupees 18 lakh will be able to avail three percent interest subsidy on loans up to Rupees 12 lakh.

How will the interest subsidy be calculated in PMAY?

Let’s say that the annual income of a person taking a loan is six lakh rupees. (Maximum loan amount is Rupees. 6 lakhs: Subsidy: 6.5%). Actual loan amount – Rupees 6 lakhs. Rate of interest: 9 percent. Monthly installment: Rupees 5,398. Total interest in 20 years: Rupees 6.95 lakh. NPV will be Rupees 2, 67,000 after subsidizing your interest at 6.5 percent subsidy. The government is providing this interest subsidy to the people. According to this, your PMAY loan actually becomes Rupees 3.33 lakh instead of six lakh rupees.

How much will be the benefit in PMAY?

Keep in mind that the borrower has taken a loan at the rate of nine per cent per annum. This decreases because the interest subsidy amount is already deposited in the account of the borrower. The effect comes in the form of reduced monthly installment and reduced interest burden. Revised loan amount: Rupees 3.33 lakh. Rate of interest: 9 percent. Monthly installment: Rupees 2,996. Total interest to be paid in 20 years: Rupees 3.86 lakh. Savings in EMI: Rupees 2,402. Total savings in interest: Rupees 3, 08,939. 

How will you get the benefit of PMAY subsidy?

Talk to the home loan institution about the subsidy. If you are eligible then your application will be sent to the Central Nodal Agency first. If approved, the agency will pay the subsidy amount to the lending bank. This amount will come in your loan account. If your annual income is seven lakh and the loan amount is 9lakh, then your subsidy will be Rupees 2.35 lakh. After reducing this, the amount of your loan will be Rupees 6.65 lakh. You will pay the monthly installment on this amount.For more details, kindly visit the government website.