Understand how a subsidy on home loan impacts the MIG category

If you are planning to buy your own home, under the Pradhan Mantri Awas Yojana (PMAY) scheme, remember that there are only a few months left for you to gather the amount for down payment, select a good builder, a desirable location, and also the home loan lender.

The recently introduced Credit Linked Subsidy Scheme (CLSS) for Middle Income Group (MIG) is applicable only for a period of one year starting 1.01.2017. Let's understand who all are eligible for the MIG category, who all can apply, how does the subsidy impact the loan amount and how much is the subsidy on home loan.

The middle-income earners

●  The MIG category further comprises of two slabs.

●  The Middle Income Group (MIG) - I include households having an annual income between Rs.6,00,001 up to Rs.12,00,000.

●  The Middle Income Group (MIG) - II includes households having an annual income between Rs.12, 00,001 up to Rs.18, 00,000.

 Cost

●  There is no processing charge for eligible housing loan amount as per the income criteria specified in the Scheme.

●  Lenders can charge the normal processing fee for additional loan amounts beyond the eligible loan amounts for interest subsidy.

 The impact

●  The Prime minister awas yojana scheme for MIG buyers might not increase the demand for residential housing to a great extent.

●  The benefit of Rs 2.3 lakh/Rs 2.35 lakh probably won't be that appealing keeping in mind the cost of houses in the urban areas.

●  There is a possibility that the government might consider doing away with the area restriction of 90/110 sq mt to increase the demand.

 How is the subsidy adjusted?

●  The home loan interest rate subsidy will be credited directly to the loan account of the beneficiaries.

●  This would lead to decreased effective housing loan and home loan EMI.

Loans under PMAY

●  You can avail the Pradhan mantri awas yojana benefits if you wish to acquire a new house from the builder and even for purchasing a house from the secondary market through repurchase.

●   One could also apply for a loan for the construction of the house. You can also apply home loans online.

●  If someone already owning a home wishes to avail pm awas yojana benefit, there's still a possibility.

●  The government has made it clear that the Mission (Housing for All by 2022) also offers enhancements/incremental housing to the existing 'pucca' house under the CLSS scheme component.

It is imperative to keep in mind that even if you are a first-time buyer it is wise to tread carefully and weigh all the options prior to venturing out to explore the affordable housing segment.