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PMAY Scheme: It is a game changer scheme in the affordable housing sector. The "Credit Linked Subsidy Scheme” (CLSS) under Pradhan Mantri Awas Yojana (PMAY) was announced by our Honourable Prime Minister Shri Narendra Modi in December 2016. The scheme envisages the vision of housing for all by the year 2022

The underlying principle:

If all applicable conditions are met as prescribed in the scheme the central government will directly credit the applicable subsidy amount in your loan account as pre payment at the end of 6th month of your loan tenure.

This onetime prepayment by the government on your behalf will lead to the reduction in your principal outstanding and therefore a corresponding reduction in interest outflow thereafter. The overall gain in terms of interest reduction for the full tenure will be much higher than the applicable subsidy itself.

Let’s look at an example

Ex: Loan amount of 50 Lakhs @ 8.6% for a tenure of 20 Years. Considering a subsidy of Rs 235068, the loan schedule for the 6th month will look like this

EMI No EMI (6th Month EMI with subsidy) Principal Interest Outstanding
1 43,708 7,875 35833 4,992,125
2 43,708 7,931 35777 4,984,194
3 43,708 7,988 35720 4,976,206
4 43,708 8,045 35663 4,968,161
5 43,708 8,103 35605 4,960,058
6 278,776 243,229 35547 4,716,828
7 43,708 9,904 33804 4,706,924
8 43,708 9,975 33733 4,696,949

Your Gain:

The subsequent reduction in principal outstanding and the corresponding reduction in interest arising out of this onetime prepayment is your gain. Not factoring in any further part payments by you the total interest saved over the full tenure will be Rs 9,06,073 and the tenure saved will be 26 months (Loan will be closed in 17 years & 10 months)…..Game changer indeed.

Applicable Conditions for PMAY Scheme

Particulars EWS & LIG MIG-1 MIG-2
Household Income Criteria (p.a.) EWS - Upto Rs 3 lakhs & LIG - Rs 3-6 lakhs Rs 6 - 12 lakhs Rs 12 - 18 lakhs
Max Loan Amout eligible for subsidy 6,00,000 9,00,000 12,00,000
Interest Subsidy Rate 6.50% 4.00% 3.00%
Max Loan Tenure for Subsidy (in yrs) 20 Or Home Loan tenure (whichever is lower) 20 Or Home Loan tenure (whichever is lower) 20 Or Home Loan tenure (whichever is lower)
Carpet Area eligible for subsidy(sqm) EWS - Upto Rs 30 sqm & LIG Upto 60 sqm 120 sqm 150 sqm
Valid Till 31st March 2022 31st March 2019 31st March 2019
Woman Ownership Mandatory Not Mandatory Not Mandatory
Remarks for ownership of the house to avail subsidy Family (i.e. Self, spouse & unmarried children) should not have any pucca house Family (i.e. Self, spouse & unmarried children) should not have any pucca house - An unmarried earning son/daughter can also avail of the subsidy even if parents own a home
Max Subsidy 2,67,280 2,35,068 2,30,156

EWS – Economically Weaker Section  LIG- Low Income Group  MIG– Mid Income Group 

Note: The subsidy could be lower than this if the tenure chosen for home loan is less than 20 years

Important Points for PMAYS :

1) After the reduction in principal the EMI can also be reduced but it is advisable to maintain the same EMI so that a bigger portion can go towards the principal every month

2) Most banks will show a much lower effective rate in their advertisements under the PMAYS scheme Ex: 6.67% or 6.9% etc. So please do not get carried away by these low rates. They are just wonders of mathematics. They actually apply the same ROI like for the regular schemes (8.5 % to 8.7%) However on account of the subsidy & the income tax benefits they will showcase and advertise a lower effective interest rate.

3) There is no upper limit prescribed for the loan amount to be taken under this scheme. However, there is an upper limit on the loan amount for the subsidy calculation under different income group.

PMAYS – Freaky questions & Freakier Answers

Case 1: The combined income of a couple is 24 lakhs/annum. Husband earns 16 lakhs/annum and wife earns 8 lakhs/annum.

Question:

If I don’t disclose my wife’s income I will fall under the 12 -18 lakhs income bracket and can avail the subsidy.

digiHOMELOAN Answer:

Please rise in honesty and do not try to fall under the category of dishonest people. The scheme is for more deserving section of the society than a family with Rs 24 lakhs as combined income

Case 2: Two real brothers wanted to avail a home loan for close to 2.25 Cr for an independent house worth 3 Cr. Both are businessmen – One has a business in Chickpet area of Bangalore with annual T/O of Rs 8 Cr and the other brother has a similar business with annual T/O of Rs 5 Cr. They supply electrical goods to builders in the city & by virtue of some barter system with these builders they now own 18 apartments across Bangalore earning rental income from all of them. These apartments are over and above the existing bungalow that each brother has. So that’s the profile of the loan seekers.

Question: Humko Pradhan Mantri Awaaz Yojna Milenga Kya

digiHOMELOAN Answer:

Avashya Milenga Sir. Aap Pradhan Mantri ko Awaaz tho lagao…. Ve khud Yojna ke Kagaz Pathra leke aap ke ghar pe prakat ho jayenge. Aap keval Bhagwan se darna seekho aur kuch karne ki zaroorat nahin hai