Full Details of PM Awas Yojana | Pradhan Mantri Awas Yojana

If you are planning to buy a house then Pradhan Mantri Awas Yojana (PMAY) can make your job easy. Earlier the benefit of PMAY was only for the poor section. Now the poor and middle class of urban areas have also been brought under the ambit of PMAY by increasing the amount of home loan.

As per the initial provisions, the home loan amount in PMAY ranged from Rs 3 to 6 lakh, on which interest subsidy was given under PMAY. Now it has been increased to Rs 18 lakh now.

Let us know what are the necessary conditions for the application of Pradhan Mantri Awas Yojana (PMAY)?

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Who can avail the benefit of PMAY?

Applicant's age should be 21 to 55 years to avail PMAY benefits. However, if the age of the head of the family or the applicant is more than 50 years, then his principal legal heir will be included in the home loan.

How much income should be earned to take advantage of PMAY?

The annual household income for EWS (Low Economic Class) is fixed at Rs.3.00 lakh. The annual income for LIG (Low Income Group) should be between 3 lakh to 6 lakh. People with annual income up to Rs 12 and Rs 18 lakh can also take advantage of PMAY.

Proof of Income

• Salary Certificate, Form 16, or Income Tax Return (ITR) for salaried people.
• Affidavit can be submitted in the form of income certificate for people doing their work for annual income up to Rs 2.50 lakh. If the annual income is more than Rs 2.50 lakh, then it is necessary to submit proper proof of income for that.

How much subsidy will be available in PMAY?

• Credit linked subsidy of 6.5 per cent is available only on loans up to Rs.6 lakh.
• People earning up to Rs 12 lakh per annum will be able to avail 4 per cent interest subsidy on loans up to Rs 9 lakh.
• People earning up to Rs 18 lakh per annum will be able to avail 3% interest subsidy on loans up to Rs 12 lakh.

The amount of government subsidy under PMAY will not be the difference (actual and subsidized received) of subsidy interest on interest in PMAY. This will be the Net Present Value (NPV) of the interest subsidy amount.

It will be calculated at a discount rate of nine per cent. To calculate the NPV of a subsidy, you need to take into account the amount to be paid for the loan and the amount of interest in each monthly instalment. The amount of subsidy in PMAY reduces your loan amount and thus reduces the interest burden on you.

How will interest subsidy be calculated in PMAY?

• Let us assume that the annual income of a person taking a loan is Rs.6 lakh.
• Maximum loan amount Rs.6 lakh: Subsidy: 6.5%
• Actual loan amount: Rs 6 lakh
• Interest rate: 9 percent
• Monthly Installment: Rs 5,398
• Total interest in 20 years: Rs 6.95 lakh
• According to the 6.5 percent subsidy, your NPV after interest subsidy will be Rs 2,67,000.

The government is providing this interest subsidy to the people. Accordingly, your PMAY loan actually becomes Rs 3.33 lakh instead of Rs 6 lakh.

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 borrower's account.
• Its effect comes in the form of reduced monthly installments and less interest burden.
• Revised loan amount: Rs 3.33 lakh
• Interest rate: 9 percent
• Monthly Installment: Rs 2,996
• Total interest to be paid in 20 years: Rs 3.86 lakh
• Monthly installment savings: Rs 2,402
• Total savings in interest: Rs 3, 08,939

How to get the benefit of PMAY subsidy?

Talk to the home loan borrower about the subsidy. If you are eligible then your application will be sent to the Central Nodal Agency first. If approved, the agency will give the subsidy amount to the lending bank. This amount will come in your loan account.

If your annual income is 7 lakhs and the loan amount is 9 lakhs, then your subsidy will be Rs 2.35 lakhs.

After deducting this, your loan amount will be Rs 6.65 lakh. You will pay the monthly installment on this amount.

If the loan amount is more than your subsidy eligibility, then you will have to pay interest at the normal rate on the additional amount.

What are the precautions to be taken in PMAY?

In fact, the interest rate on home loans can vary from nine per cent. Currently, home loan rates based on MCLR are close to 8.5 per cent. Due to this the interest rate and monthly installment can be low.

Check eligibility related issues to take advantage of PMAY. If there is a pucca house anywhere in the country in the name of you, spouse or child, then the benefit of PMAY cannot be availed.