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Decoded: Pradhan Mantri Awas Yojana

When the NDA government came into power, one of their promises was to provide housing for all by 2022. A dream that seems unachievable for many is inching closer to reality with the government’s new steps. The Pradhan Mantri Awas Yojana (PMAY) has expanded its scope to address the housing needs of those planning to buy their first home. The Prime Minister has doubled the quantum of loan eligible for interest benefits under the PMAY in cities to Rs. 6 lakh since the initial days after its launch.

What is the PMAY?

Launched in 2015, the PMAY was the first step towards fulfilling the government’s dream of building affordable pucca houses (with round-the-clock electricity, water facilities, and proper sanitation) for people.

This scheme has a number of aspects that need to be understood:

  • This scheme is applicable only for first-home buyers. Additionally, people with property against their name (or those who have help property earlier, but have transferred the property to someone else’s name) will not be eligible.
  • Banks and housing finance companies will not charge a processing fee from applicants
  • Eligibility: Those who have applied for a loan on or after 1st January, 2017, and those whose loans have been sanctioned on or after 1st January, 2017, are eligible for the scheme.
  • The tenure of the loan sanctioned is to be 20 years or that preferred by the beneficiary, whichever is lower.
  • Most banks are bending over backwards to help people make use of this scheme. They have created separate teams to help people buy their first home under this scheme, deployed more people, and created robust infrastructure to support the influx of people interested.
  • The total subsidy on interest accrued on these loans will be paid to the beneficiaries in one go, thereby reducing the burden of EMIs. The beneficiaries, however, will not get the money in hand. It will be adjusted against the principal quantum of the loan.
  • Those earning up to Rs. 18 lakhs a year are eligible for the loan. The eligibility parameters will be applicable only till March 2021, after which only those earning up to Rs. 6 lakhs per annum will be able to avail of this scheme.
  • Under this scheme, women are to be given preference. People can avail of this scheme under their mother’s name, sister’s name, and wife’s name.

How do you go about applying for the subsidy?

  • For starters, you need to look for a flat you want to buy.
  • Once you have zeroed-in on a house, you need to approach a bank or an NBFC (Non-Banking Financial Corporation)
  • During the process of applying for a loan, you’ll have to notify the lenders of your intention to avail of the PMAY scheme.
  • The lending corporation will gather your details and send it to the National Housing Board (NHB) for verification.
  • Upon successful verification, the NHB will sanction the subsidy and transfer the amount to your loan account.

The scheme will enable buyers to buy a bigger home in the same budget. For example, if you can afford a 1 BHK for 10 lakhs, you will be able to buy a 2 BHK for 15 lakhs with the help of this subsidy.

To calculate how this scheme will help you reduce your EMIs, visit http://pmaymis.gov.in/EMI_Calculator.aspx

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