In 2015, the government of India launched the Pradhan Mantri Awas Yojna (PMAY). The goal of this scheme is to make housing affordable for all Indian citizens by 2022, especially for those coming from the Economically Weaker Section (EWS), and the lower income groups living in the urban areas.

Only first-time homebuyers are eligible for this scheme.

Borrowers can avail a subsidy on the interest amount when they apply for a home loan through PMAY. This subsidy is known as the Credit Linked Subsidy Scheme (CLSS).

Borrowers receive interest subsidies according to the income slab they belong to. The same can be calculated using the PMAY calculator

What are the features of the PMAY scheme?

• The interest rate subsidy that is provided under this scheme extends up to 6.5% for all eligible borrowers for a tenure of 20 years.
• The interest rate subsidies differ according to the income slabs of the borrowers:
  • Economically Weaker Section (EWS): Borrowers, whose annual income does not exceed Rs. 3 lacs, can apply for a loan of up to Rs. 6 lacs against an interest subsidy of 6.5%.
  • Lower Income Group (LIG): Borrowers, whose annual income is between Rs. 3 lacs to Rs. 6 lacs, can apply for a loan of up to Rs. 6 lacs against an interest subsidy of 6.5%.
• Any loan amount that is added to the subsidised loan amount will not enjoy any subsidised rates
• Under the PMAY scheme, senior citizens and the differently-abled will be given preference to procure a house on the ground floor.
• All the houses subsidised under the PMAY scheme have to be constructed using eco-friendly and sustainable technologies.
• Borrowers who want to purchase a resale house or a new house from a builder or developer can also apply to the PMAY scheme.
• Similarly, loan seekers who want to upgrade from a “kutcha” house to a “pucca” house or construct a new house can avail the PMAY scheme.

When will an eligible customer receive a PMAY subsidy?

The complete process from application to the amount being credited into the Home Loan Account takes anywhere between 3-6 months (within 1 year). The government will release the funds only after the verification of all the documents provided by the borrower.

After applying for a home loan through PMAY at any lending institution or bank, the loan seeker receives an application ID. Lenders then then upload the borrower’s documents on to the portal of the National Housing Board, the government authority which is responsible for accepting / rejecting applications for the PMAY subsidy. Applicants can track their CLSS status through these Application IDs.

Using their Application IDs, borrowers who wish to get a PMAY CLSS Subsidy can track their application submissions. They can also track their subsidy releases. They will also be intimated at regular intervals about the progress in their loan application process through SMS.

Borrowers can track their CLSS status by visiting the official website of PMAY.

Once the subsidy is credited to the Home Loan Account, it will reflect in the Account Statement. Once the subsidy is granted, the overall interest amount will be subsidized and correspondingly, the home loan EMI may also decrease.

Are there any riders to the PMAY scheme?

The PMAY scheme can only be availed if the objective of the loan is to improve, construct or purchase a home. Borrowers can also apply for a loan to extend or renovate the house if it is being converted from a kutcha house to a pucca house.

If a loan taker belonging to the LIG or EWS category wants to avail the subsidy, it is mandatory to have an adult female as the property owner or co-owner while applying for the home loan and purchase of a property. It can be a sister, daughter, wife or mother. Co-applicants could be male or female.

If you wish to know more about the PMAY credit linked subsidy scheme, get in touch with us today.

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