Here, you’ll get an understanding about the adjustment of subsidy, loan parameters, availing of loan, house area, etc.

Subsidy calculation

PMAY, an exclusive and ambitious initiative by Government of India, aims towards ‘housing for all’ by 2022. The scheme offers loan at a subsidised rate of interest thereby enabling people of lower income group to afford a house. Our previous blog waked you through the eligibility criteria and the working of PMAY scheme.

When calculating the subsidy interest amount, it is the difference of net present value of the interest subsidy amount that is considered and not the actual and subsided interest rate amount. The NPV of the subsidy is calculated based on the loan’s amortisation schedule as the interest portion of each equated monthly instalment (EMI) is considered for the purpose. It is the subsidy which reduces the loan amount and henceforth the interest amount too.

Adjustment of subsidy

To claim the subsidy, you’ll have to first enrol for PMAY and apply for a home loan from your preferred lender who is listed under PMAY scheme. Once your loan application is accepted, you’ll be given the stated amount. Your lender will now apply for subsidy on your behalf from the government. Once the lender receives the subsidy money, he’ll credit the same to your home loan account and from then your EMI’s will reduced accordingly.  

This implies to the fact that you’ll initially have to pay EMIs as per the agreed rate of interest. It is only after receiving the subsidy amount that you pay subsidized EMIs. Additionally, you will be compensated against the excess EMIs you had paid once your subsidy amount is credited.

Houses under PMAY

You can avail PMAY benefits if you are to acquire a new house from the developer/builder, repurchase of a house from the owner or get it for the construction of your new house too. PMAY is also available for the enhancements/incremental of existing ‘pucca’ house under the CLSS component. In this case, the loan lender can’t refuse on the grounds that you own a ‘pucca’ house. You can avail the loan for the addition of kitchen, rooms, bathrooms, etc.

The houses under PMAY are considered as per the carpet area. As per the updated guidelines of 2018, for MIG – I, the carpet area is up to 160 sq mt and for MIG II category it is 200 sq mt.

The carpet area is actually the wall to wall area, where you can lay the carpet, excluding the thickness of the walls and the outer wall of the house. The houses should also have basic facilities and infrastructure such as toilet, water, sewerage, road, electricity, etc.        

Loan Lender under PMAY

The lender enlisted under PMAY include commercial banks, housing finance companies, regional rural banks, state cooperative banks, urban cooperative banks, small finance banks, non-banking financial company, etc. You must also compare all the lenders and the rate of interest they offer before signing one.

PMAY brings an opportunity to every household in the country to own a house. By collaborating with builders, Government of India is making housing dream for all a reality. In order to make the project a success, GOI is also providing best technologies that help in constructing houses at a speedy rate and with a lower cost.