Launched in June 2015, Pradhan Mantri Awas Yojna is an ambitious project of the Indian government to make the “Housing for all” dream a reality. Buyers looking for the best way to finance their home purchase can use this scheme to buy a house of their own.
Several steps have been taken by the current government to make the “Housing for all” dream a reality by 2022. The Pradhan Mantri Awas Yojna (PMAY) is one of the crucial steps to give homes to all. While the scheme was initially introduced for EWS and LIG (Economically Weaker and Low-Income Group), its scope is now expanded to cover MIG (Mid-Income Group) as well.
People intending to purchase a house in metro or non-metro cities and looking for a way to finance their purchase can use the PMAY scheme as it is highly beneficial and can significantly reduce the cost of the property. Here are five things you should know about the scheme-
- How is the Classification of MIG Done?
MIG households are classified into two- MIG-I and MIG-II. MIG-I households have a yearly income of Rs. 6 to 12 lakhs, and MIG-II households have an income of Rs. 12 to 18 lakhs. With the help of the scheme, MIG-I can get loans of up to Rs. 9 lakhs with an annual interest subsidy of 4% and MIG-II can get loans of up to Rs. 12 lakhs with a subsidy on the interest of 3% annually for a tenure of up to 20 years.
As per the scheme, single working women, widows, SC/ST, OBC, transgender, and differently abled will be given more preference. This means that those looking for loans of up to Rs. 9 lakhs can get an interest subsidy of up to Rs. 2.35 lakhs and those who want loans up to Rs. 12 lakhs can get a subsidiary of up to Rs. 2.30 lakhs.
- Size and Cost of Property
The PMAY scheme is applicable for MIG units which measure 90 to 110 square meters and are priced between Rs. 12 lakhs to 50 lakhs. Loans above the maximum loan limit of the PMAY scheme are available for the borrowers are standard rates. The size of the property is calculated as per its carpet area which is the area within the house walls and does not include wall thickness.
- Non-metros and Metros
As per the RBI, cost of a standard MIG residential property should not be more than Rs. 65 lakhs, out of which the loan can be of up to Rs. 50 lakhs, in 6 metro cities. In non-metro areas, the cost should be Rs. 50 lakhs where the loan amount can be up to Rs. 40 lakhs. Until 2014, this limit was Rs. 25 lakhs in the metro cities and Rs. 15 lakhs in non-metro cities. The RBI has also mentioned that it will review this definition periodically.
- Disbursing Agencies
HUDCO (Housing and Urban Development Corporation) and NHB (National Housing Bank) are two central agencies responsible for channelling the scheme to lending institutions. As a result, several banks and NBFCs are recognised as primary lending institutions of the scheme. However, not every major bank or NBFC is part of the scheme.
- Major Benefits of PMAY
- PMAY housing finance scheme is an excellent way for first-time buyers to get a subsidy on home loan interest
- The applicants won’t be levied any processing fee from the lenders under the scheme
- The interest subsidy as per the loan amount is paid upfront to the beneficiaries at once, and this significantly reduces the EMI burden
While India has developed by leaps and bounds in the last decade, a large number of people still do not own a house. The PMAY is a huge step to abolish homelessness and help people buy a home at lower prices. First-time buyers looking to finance their purchase can use this scheme to get an interest subsidy and achieve their dream of buying a home which they can call their own.