How PMAY is giving a boost to Housing Loans

Housing loans have become cheaper. The government's Pradhan Mantri Awas Yojana (PMAY), being implemented during 2015-2022, is providing central assistance to Urban Local Bodies (ULBs) and other implementing agencies through States/UTs for credit-linked subsidy, affordable housing and sops for beneficiary-led individual house construction/enhancement. 

Over 1.6 lakh people benefitted from credit linked subsidy scheme vertical during 2015-18, with home loan route being the preferred option. According to stats, the National Housing Bank (NHB) has sanctioned over Rs 3,000 crore under the credit-linked subsidy scheme of PMAY, indicating that home buyers, who were earlier reluctant to buy flats, are once again taking advantage of the schemes and low home loan interest rates to get their dream home from banks.

Under the PMAY, home loan borrowers can access affordable housing credit linked subsidy. Under this option, credit linked subsidy will be provided on home loans taken by the eligible urban poor (EWS/LIG) for acquisition, construction of a house. There are 4 schemes like CLSS – EWS / LIG, revised CLSS – EWS/LIG, CLSS (MIG-I) and CLSS (MIG-II). There is a huge demand for these sops from home loan borrowers, given that already low home loan interest rates make it quite affordable to buy a house.

Under the PMAY, credit linked subsidy scheme for EWS / LIG is also given to home loan takers. In this scheme, credit linked interest subsidy at the rate of 6.50% for 15 years or actual tenor of the loan, whichever is lower, will be provided. This will be given to the eligible beneficiaries in EWS/LIG category by the Government of India. EWS applicants are defined as EWS households with an annual income up to Rs 3  lakh, while LIG households are those with an annual income between Rs 3 lakh to Rs  6 lakh. The maximum subsidy is of Rs 2.20 lakh. You can use a home loan calculator to see the exact impact of such subsidies. 

In the revised credit linked subsidy scheme for EWS/LIG, all the above guidelines of CLSS- EWS / LIG applies to this scheme also but the maximum term of loan has been increased from 15 years to 20 years. It is estimated that home loan borrowers can get a maximum subsidy of Rs 2.67 lakh. For people opting for small homes and smaller home loans, this is a big boon.

Lastly, there is a credit linked subsidy scheme - MIG. This is urban areas under the ambit of Pradhan Mantri Awas Yojana. The CLSS-MIG has now been extended up to 31.03.2019. The credit linked subsidy at 4% will be available for loan amount up to Rs. 9 lakh in case of MIG-I and at 3% for Rs 12 lakh in case of MIG-II. However, the banks can sanction home loans more than Rs 9 lakh or Rs 12 lakh, but the subsidy will be limited to these amounts depending on the situation.

With all such attractive schemes available, home buyers are taking the next step. During the last three years from 2015 to 2018 over 45 lakh, dwelling units have been approved for construction under the PMAY. The cumulative units under PMAY(U) is estimated to 47,52,751.

For borrowers interested in taking a home loan under PMAY, use equated monthly installment (EMI) calculators to check how much you would be paying at each stage of your home loan. If you are eligible for the subsidy, then the EMI burden will accordingly go down. IDFC FIRST Bank offers a wide variety of simple home loan, short & sweet home loan, booster home loan and max saver home loan to suit your needs. Add to them the PMAY boost, and you have an incredible offer you cannot refuse.