PMAY – The best way to buy your own home

by Litty Jose Finance Analyst

Owning a home of your own is a goal for most of us. But with real estate prices being sky high, not many of us can actually afford to purchase our dream homes. But with PMAY or Pradhan Mantri Awas Yojana you can finally fulfil your lifelong dream of owning a home of your own.

PMAY is an interest subsidy scheme that has been named as 'Credit Linked Subsidy Scheme for Middle Income Groups - CLSS (MIG)'. As per this new subsidy, middle-income groups with incomes in the eligible range will get a subsidy on their interest rate of three to four percent. This scheme has been devised to ensure that more and more people can avail of housing loans and purchase their own homes.

Here’s what you need to know about this clss scheme and eligibility.

1. People whose incomes fall in the range of 6 lacs to 18 lacs are eligible for this subsidy under the CLSS.

2. People whose housing loans were approved and those whose home loan application was in review since 1^st January 2017 are eligible for this subsidy.

3. Peoples who have an annual income of 12 lacs are eligible for a subsidy of four percent on their home loan of up to 9 lacs. People who have an annual income of 18 lacs are eligible for a subsidy of three percent on a home loan of 12 lacs.

Here are the income slabs for the CLSS eligibility under the Pradhan Mantri Awas Yojana.

1. People with an annual income of Rs.6 lacs and below can avail of loan of Rs.6 lacs at an interest of 6.5% for tenure of 20 years.

2. People with an annual income of Rs.12 lacs and below can avail of loan of Rs.9 lacs at an interest of 4% for tenure of 20 years.

3. People with an annual income of Rs.18lacs and below can avail of loan of Rs.12 lacs at an interest of 3% for tenure of 20 years.

Here’s how this scheme will affect home loan interest rates.

1. The interest subsidy of four per cent under CLSS (MIG) will bring down EMIs of borrowers by Rs. 2,062 per month and Rs 2,019 per month on a housing loan of Rs 9 lakh and Rs. 12 lakh respectively.

2. The total interest subsidy accrued on these loan amounts will be paid to the borrowers up front in one go. This in turn will reduce the burden of EMI on the user.

The tenure of these loans has been specified as 20 years or as preferred by the borrower, whichever is lower.