Pradhan Mantri Awas Yojana (PMAY) Credit-Linked subsidy scheme: Prime Minister Narendra Modi government’s flagship scheme, Housing for All, aims to meet the housing needs of the growing population. If you are thinking to buy a house under Pradhan Mantri Awas Yojana (Urban), a part of the Housing for All mission, it could be the right time to start your search for the home. The PMAY (Urban) comes with Credit Linked Subsidy Scheme (CLSS) and provides interest subsidy to the eligible individuals. The CLSS which was initially extended till March 31, 2019 was later on extended till March 31, 2020. With just 180 days for the CLSS interest subsidy scheme to end, those who wish to buy a home may explore the opportunity.
PMAY Subsidy Scheme
The Credit Linked Subsidy Scheme (CLSS) for MIG caters to two different income segments – MIG I is for those with annual income between Rs.6,00,001 to Rs.12,00,000 while MIG II covers those with yearly income between Rs.12,00,001 to Rs.18,00,000. The maximum upfront amount of subsidy comes to Rs 2,35,068 and Rs 2,30,156 for the MIG I and MIG II categories respectively.
PMAY- How it works
For the eligible individual in the MIG-I category, an interest subsidy of 4 per cent will be provided for loan amount up to Rs.9 lakh. Similarly, for the MIG-II category, an interest subsidy of 3 per cent will be provided for loan amount up to Rs.12 lakh. One may get a higher loan amount sanctioned from the bank, however, subsidy will be provided for Rs 9 and Rs 12 lakh of loan amount respectively. The interest subsidy after working out the PMAY subsidy calculation formula, will be credited upfront on the loan amount thus helping the borrower to pay lower EMIs and also save on interest cost.
For example, if someone in the MIG II category wants to get a home loan of Rs 36 lakh, then the interest subsidy of 3 per cent will apply on Rs 12 lakh, while on the balance loan amount of Rs 24 lakh, the individual will pay regular interest rate as charged by the bank.
PMAY NPV calculation
To calculate the amount of interest subsidy using the PMAY interest subsidy calculator, the discounted rate for Net Present Value (NPV) calculation is to be considered as 9 per cent over a maximum loan tenure of 20 years or the actual tenure of the loan, whichever is lesser.
PMAY- How to apply
If you are first-time home buyer, making use of the interest rate subsidy will help keep your EMIs lower and also in keeping the overall interest burden low. Zero-in on to the right residential project, and then approach the bank to apply to this scheme before the end of the financial year.