PMAY Subsidy: Learn How PMAY Subsidy Make Home Loan Cost Effective

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Owning a home is an ambition most of Indians cherish in their life. However, with the real estate sector going through difficult times, most of the home buyers are opting for budget homes and are looking for subsidies and interest benefits one can avail in the process. Prime Minister Awas Yojana (PMAY) is a Central scheme which is rolled out by Narendra Modi government with an intention to provide housing for all by 2022. Under this credit linked subsidy scheme (CLSS), the Centre has been trying to promote demand for affordable housing scheme by offering interest subvention on low-budget home loans.

In fact, the subsidised home loans under Prime Minister Awas Yojana have become so popular among the middle-class that it is driving home loan growth for the banks. Now, if you are one among those wondering why BPL families or farmers alone are getting subsidies, you can now stop fretting and go for this home loan and start enjoying the benefits. And the main customers of this home loan scheme are those who have an annual income in the range of Rs 6 lakh and Rs 18 lakh under the two middle-income groups of the PMAY scheme.

Under PMAY (Urban) scheme, Centre provides a direct subsidy to urban buyers of affordable homes. The credit-linked subsidy classifies applicants under four groups -- Economically weaker section (EWS), Light income group (LIG), Middle-income group (MIG I), and Middle-income group (MIG II) -- for considering the qualification. Under the scheme, those purchasing a new affordable home can avail a concession in interest of about 3-4 per cent on the amount borrowed, subject to certain conditions. On an average, PMAY scheme home loans carry a subsidy amount of up to Rs 2.67 lakh, with a much lower interest rate of 6.50 per cent per year.

For availing the subsidy, a home loan borrower has to submit a self-declaration on the income and title of the property you are planning to buy. The subsidy will be deducted from the principal dues of the home loan borrower, bringing down the amount of EMIs payable. The home loan subsidy will be calculated as the current value of interest savings on entire loan tenure. The credit-linked subsidy, which is at four per cent, would be provided for home loan amounts up to Rs 9 lakh in the case of a middle-income group (MIG) I , and at three per cent for loans up to Rs 12 lakh in case of middle-income group II. It is not necessary that banks will have to restrict themselves to granting just Rs 9 lakh or Rs 12 lakh as loan. It can grant a bigger amount, but the only thing is that the subsidy will be limited to Rs 9 lakh or Rs 12 lakh as would be the case.

Since the PMAY scheme is mainly meant to provide housing for who all do not have a house to claim as their own, all those who don't already possess one are eligible to take a subsidised home loan under the scheme. According to the PMAY rule, "The beneficiary family should not own a pucca house and the beneficiary family should not have availed of central assistance under any housing scheme from the Government of India." To explain what a beneficiary family is, well it comprises of husband, wife, unmarried sons and/or unmarried daughters. Meanwhile, it is necessary that the beneficiary family members provide their Aadhaar numbers while applying for the loan. This is to avoid duplication in granting the loan.

Also, the law says, "An adult earning member (irrespective of marital status) can be treated as a separate household, provided that he/she does not own a pucca (an all-weather dwelling unit) house in his / her name in any part of India." Which means that even if children (be it married or unmarried) are staying with their parents in a house owned by the parents (or on rent, in the same or another city), they can opt for PMAY scheme benefits provided they are earning and don't own any other home. A married couple living on rent -- even if their parents own a house -- will come under the eligible category as they will be treated as a separate household. But, the PMAY benefits will be extended to only one of them of the both together (as a joint-ownership).

Those availing PMAY home loan benefits should own a PAN Card. Apart from that one needs to own any of the documents mentioned below: 

• Aadhaar Card
• Voter ID Card
• Valid Passport
• Driving License
• Photo Credit Card
• Photo Identity card issued by a govt. body
• Or a letter from a recognised public authority or a public servant verifying the identity of the customer with a recent photograph, which is not more than 30 days old.

Anyone of the below documents is required to prove the address of one applying for a home loan under the PMAY scheme:

• Aadhaar card
• Voter ID Card
• Valid Passport
• Letter from a recognised public authority or public servant verifying the identity and residence of the customer
• Latest Utility bill
• Rent agreement on stamp Paper
• Bank Statements reflecting the address of borrowers of any commercial nationalized bank
• Credit Card Statement not older than 3 months
• Life Insurance Policy
• Residence address or a Certificate /letter issued by the employer on company letterhead
• Copy of Sale Deed of the property (residence), if owned
• Municipal or property tax receipt 
• Post office saving bank account statement
• Pension or family pension payment orders (PPOs) issued to retired employees by Govt. departments or Public Sector Undertakings, if they contain the address
• Letter of allotment of accommodation from employer issued by State or Central Govt. departments, statutory or regulatory bodies, and public sector undertakings, scheduled commercial banks, financial institutions, and listed companies. Similarly, leave and license agreements with such employers allotting official accommodation
• Documents issued by Govt. departments of foreign jurisdiction and letter issued by Foreign Embassy or Mission in India

As proof of income to avail home loan subsidy under the PMAY scheme, one will have to produce all the documents given below:

• Last 2 months salary slip
• Last 6 months bank statement of salaried account
• Latest Form 16 filed as Income Tax Returns (ITR)