MIG-I individuals get an interest subsidy of 4 per cent while for the MIG II category, an interest subsidy of 3 per cent is provided for a loan up to Rs.9 lakh and Rs 12 lakh respectively.
If you are looking to buy a house by taking a home loan, the last date to avail subsidy on the interest is nearing. The Pradhan Mantri Awas Yojana (PMAY) Credit-Linked Subsidy Scheme (CLSS) is closing on March 31, 2020. With only a few days left, one may have to start the process of applying for PMAY soon. The amount of subsidy will depend on your income as the CLSS caters to the two income-segments of MIG I and MIG II.
In the CLSS, those with income between Rs 6 lakh and Rs 12 lakh are covered under the MIG-1 scheme and those with income between Rs 12 lakh and Rs 18 lakh are covered under the MIG-II scheme. The maximum amount of subsidy for the MIG I and MIG II categories is Rs 2,35,068 and Rs 2,30,156, respectively. In simple terms, this is the amount of interest you end up saving if you have taken a loan under the CLSS scheme.
The MIG-I individuals get an interest subsidy of 4 per cent is provided for loan amount up to Rs.9 lakh while for the MIG II category, an interest subsidy of 3 per cent is provided for loan amount up to Rs.12 lakh. That does not mean, one cannot take a higher amount of loan. One can get a loan based on one’s eligibility, however, the subsidy is calculated on a loan amount of Rs 9 lakh and Rs 12 lakh respectively. After using the PMAY subsidy calculation formula, the subsidy amount is credited upfront on the loan amount. This benefits the borrower as lower EMIs will be paid because of subsidy thus leading to saving on interest cost.
For example, if a home loan borrower falling in the MIG II category takes a home loan of Rs 40 lakh, then on Rs 12 lakh the interest subsidy of 3 per cent will apply, while on the balance loan amount of Rs 28 lakh, the borrower pays the regular home loan interest rate to the bank.
As per the PMAY CLSS guidelines, in order 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.
If you want to take the benefit of the CLSS of PMAY, make sure you first check your eligibility from the bank. The PMAY-CLSS helps a first-time homebuyer to make use of the interest rate subsidy which in turn keeps the EMI lower and interest cost also low. As the PMAY-CLSS is available till the end of the financial year, one may have to act fast by approaching the builder or the bank to avail the benefit of the scheme and own a home at a lower cost.