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Pradhan Mantri Awas Yojana 2017 – New Home Loan Intetest Subsidy

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Prime Minister Modi has now enhanced the scope and benefit under Pradhan Mantri Awas Yojana (PMAY) in 2017. This is done to boost the affordable housing and middle income category of the housing sector.

The scheme was initially launched in June 2015 to provide ‘Housing for All by 2022’, offered beneficiaries an interest subsidy at the rate of 6.5% for a loan amount of up to Rs 6 lakh.

Now the scope and benefit of this scheme is now enhanced as follows:

  • In Urban Areas – Loans of up to Rs 9 lakh taken in 2017, will receive interest subvention of 4%.
  • In Urban areas – Loans of up to Rs 12 lakh taken in 2017, will receive interest subvention of 3 %,”
  • For rural areas – Loans of up to Rs 2 lakh taken in 2017, for new housing, or extension of housing in rural areas, will receive an interest subvention of 3 %.

The current market interest rate on home loan is approx 9%, so a subsidy of 4% will mean that the effective interest rate for Rs 9 lakh loan will be only 5%. For e.e. an individual taking a 15-year loan of Rs 9 lakh would save Rs 2,011 in EMI every month on account of 4 % lower interest rate as his EMI will come down from Rs 9,128 to Rs 7,117. Similarly, an individual taking a loan of Rs 12 lakh under the scheme will save Rs 2,044 in EMI on account of the 3% lower interest rate.

Eligibility Criteria for Pradhan Mantri Awas Yojana (PMAY Urban)

To become elegible for subsidised home loan under this scheme, following criteria need to be met: 

  1. The carpet area of houses being constructed under Pradhan Mantri Awas Yojana should be up to 30 square metres of EWS and 60 square metres LIG category. Further, the loan could be for buying, constructing or renovating of house including addition of rooms, kitchen, toilet etc. to existing dwellings as incremental housing.
  2. Pradhan Mantri Awas Yojana is for lower income groups (LIG) and Economic Weaker Sections (EWS) people. To be eligible for PMAY Income in case of EWS should not exceed Rs.3 lakhs per annum while in case of LIG income should not exceed Rs.6 lakhs per annum.
  3. Beneficiary should not own a pucca house either in his/her own name or in the name of any of his/her family member in any part of India. In simple terms the beneficiary should be first time home buyer. Family members comprise husband, wife and unmarried children.

How to Apply for Pradhan Mantri Awas Yojana

If you fulfill the above criteria, then you can visit PMAY site and submit application in the prescribed form

  • Format-A if you are slum dweller or
  • in Format-B if you belong to EWS or LIG category.

You will be given a reference number once you submit the application for future reference. You can also track whether you will be awarded a house under PMAY or not.

You can also visit Common Service centers (click here to locate CSC center nearest to you) or can apply through any ‘State Land Nodal Agency’ designated by the State Governments for implementing the Mission.

Once you are allotted a house under PMAY you can choose to avail subsidized home loan through any Scheduled Commercial Banks (like SBI, BOB, PNB, ICICI Bank etc.), Regional Rural Banks (RRBs), Housing Finance Companies, Urban Cooperative Banks, State Cooperative Banks or any other institutions as may be identified by the Ministry.

If you have any queries related to this article or any other personal finance query ( Investment, Taxation etc), please comment below

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The author is a Chartered Accountant and loves to write about Personal Finance, Wealth Management, Taxation etc. Disclaimer - The articles on this website is for informational and knowledge purposes and should not be treated as financial advice, Please consult your financial advisor before taking any investment decision.

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