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Own a Home with Pradhan Mantri Awas Yojana

Own a Home with Pradhan Mantri Awas Yojana

All you need to know about owning a home with Pradhan Mantri Awas Yojana

In June 2015, the honourable Prime Minister of India, Shri Narendra Modi announced a housing scheme dedicated to providing housing for all Indians, in rural as well as urban areas. Under this scheme, named the Pradhan Mantri Awas Yojana, the government has made provisions to construct affordable, concrete homes by replacing slums. The basic idea of this scheme is to ensure that homes are within the reach of economically weaker, middle and lower income groups. Such individuals can benefit from subsidised interest rates on home loans. Here’s all you need to know about this futuristic housing loan scheme.

Basic features of PMAY scheme

The Government of India intends to provide housing for all by the year 2022 under the PMAY scheme. Here are the salient features of this scheme.

Construction of ‘pucca’ houses: The problem of ‘kutcha’ (temporary) houses has been plaguing the metro cities and rural areas of India for a long time. Under the scheme, the government intends to replace these ‘kutcha’ houses with ‘pucca’ or permanent concrete houses. The idea is to construct permanent houses that are not destroyed in rains, floods, storms and other such natural calamities.

Standard size of all houses: Under PMAY, all builders must construct houses with a minimum 30 square meters carpet area. This is in accordance with the National Building Code standards. In case the builder is unable to construct houses of this minimum size, the company must seek the consent of the NBC as well as the beneficiary. It must also obtain state level sanctioning-cum-monitoring authorisation before construction commences.

Clauses of construction: All houses built under the PMAY scheme should be built in accordance with RERA (Real Estate Regulatory Authority) guidelines. This means builders are obligated to use high-quality raw materials for construction, such that the home owner does not need to undertake any reconstruction or remodelling for at least five years. In case of discrepancies in construction, the builder is obligated to complete the repairs for free within one month.

CLSS scheme: This housing scheme is also a credit-linked subsidy scheme or CLSS scheme. This is because eligible applicants can get subsidies on home loan interest rates for properties purchased under this scheme. You can get subsidised interest rates on home loans based on the income category you belong to and the size of the property purchased.

Interest rate and tenure of the loan: Home loans taken under this scheme may be repaid in long tenures lasting up to 20 years or more. These home loans are provided at some of the lowest interest rates because applicants can get home loan subsidy on the interest rate. The subsidy you can avail also depends upon income group you belong to.

Eligibility criteria and beneficiaries under the scheme

The government has taken great care to ensure that members of all sections of the society can become homeowners through the PMAY home loan subsidy scheme. Here’s how beneficiaries are defined under this scheme as per their annual income. Also find out the subsidies you can get on home loans taken for purchasing houses under this scheme.

Income Group Annual Household Income Subsidy calculated on maximum loan amount of Subsidy available on home loan interest rate (in percent) Maximum subsidy available (in INR)
Economically Weaker Sections (EWS) Under Rs.300,000 Rs.600,000 6.50% Rs.267,000
Low Income Groups (LIG) Rs.300,000 to Rs.600,000 Rs.600,000 6.50% Rs.267,000
Middle Income Group 1 (MIG 1) Rs.600,000 to Rs.12,00,000 Rs.900,000 4% Rs.235,000
Middle Income Group 2 (MIG 2) Rs.12,00,000 to Rs.18,00,000 Rs.12,00,000 3% Rs.230,000

The government encourages members of all sections of society -- including those belonging to the general category as well as minorities like scheduled castes, scheduled tribes and other backward classes (OBC) -- to apply for homes under the PMAY scheme. Moreover, women – married or widowed -- and members of transgender communities may also apply for homes under this scheme.

Purpose of the loan

Apart from purchasing pre-constructed houses under the Pradhan Mantri Awas Yojana, you can also take loans under this scheme for constructing a property on a plot of land you own or even opt for a home extension loan. However, the home extension loan facility is only offered to members of EWS and LIG groups.

Final word: Since the launch of the PMAY scheme in June 2015, lakhs of homes have been constructed in 500 Indian cities and towns. Construction first began in urban areas, and is underway in rural areas of India now. In fact, construction in phases 1 and 2 has been completed, while phase 3 will be completed around March 2022.

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The post Own a Home with Pradhan Mantri Awas Yojana appeared first on Indiabulls home loans.

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