Broad-based PMAY scheme offers affordable housing options to buyers

India’s middle class population was estimated to be 27 crore in 2016. The number of middle class households in India is likely to double by 2025 to 54 crore.

This segment makes substantial contribution to the economic growth of the country by paying taxes. However, for many years, the aspiration of owning a home has largely remained unfulfilled due to lack of affordable prices.

In his new year’s eve address, Prime Minister Narendra Modi announced the Pradhan Mantri Awas Yojana (Urban) for middle income groups. And now, the government has come up with the scheme related guidelines. This interest subsidy scheme has been named Credit Linked Subsidy Scheme for Middle Income Groups – CLSS (MIG). This is also in line with the government’s stated vision of Housing for All by 2022.

What is credit-linked subsidy scheme?

Credit-linked subsidy is a part of the PMAY scheme. Middle income groups (MIG) that fall under the annual income bracket of above `6 lakh to `18 lakh are eligible for interest subsidy on housing loans under the new CLSS (MIG). Home buyers are entitled to get an interest rate subsidy of 4% to 5%. Initially, the scheme will be implemented for a period of one year. However, with limited budget allocated by the government for this subsidy, it is expected that the scheme may close even before the deadline as more people rush to avail these benefits.

Who is eligible for the scheme?

All middle class home buyers with annual income up to `18 lakh per year will be eligible for receiving interest subsidy on housing loans under the Pradhan Mantri Awas Yojna (Urban).

In the guidelines, the tenure of loan has been capped at 15 to 20 years. The total interest subsidy to be paid to MIG applicants on a `9 lakh loan is about `2.35 lakh and on a loan of `12 lakh, it is `2.30 lakh per beneficiary. Any additional loan shall be available at the current home loan rates.

Interest subsidy will also be provided on loans for construction or acquisition of a house with carpet area of 30 sq m to 60 sqm and a loan amount of ` 6 lakh per annum.

Interest subsidy will be provided on home loans for construction or purchase of house with carpet area of 90 square meters by those earning up to `12 lakh per annum and of 110 sqm by those earning up to `18 lakh per year.

To support this scheme, non-banking financial companies or NBFCs, small finance banks have been recognised as primary lending institutions. Commercial banks, housing finance companies, regional rural banks, state and urban cooperative banks are accepting applications directly from beneficiaries and advancing loans under the scheme.

No processing fee will be charged by banks or housing finance companies from the applicants under CLSS.

So, if you have already bought your house after January 1, 2017 or are planning to buy a house soon, this may be the best time to avail an additional discount on your home loan. After the announcement of the scheme, several developers have brought many of their projects under the ambit of the scheme.

Raheja Developers has a number of projects under these schemes. Raheja Vanya, an upcoming project located in New Delhi Extension area offers affordable homes under the CLSS scheme.

Other projects that come under this scheme include Raheja Sampada, Shilas, Maheshwara and Oma. All these projects are located in Gurgaon and some of them are ready-to-move-in projects.