In pursuance of the goal – Housing for All by 2022, the year when India would mark the completion of 75 years of independence, the Ministry of Housing and Urban Poverty Alleviation (MoHUPA) in 2015 has introduced the Pradhan Mantri Awas Yojana (PMAY) to provide affordable housing through the adoption of eco-friendly construction methods for the benefit of the urban poor and economically backward sections. Initially set out to provide houses to the urban poor, the scheme later in 2016 incorporated a rural component, PMAY-Gramin, a rehash of the existent Indira Awas Yojana (IAY) scheme. The PMAY-G ensures provision of financial support for construction of pucca houses to all houseless and households living in physically unstable homes in rural areas.
Steps to avail a home loan under PMAY
The scheme offers housing loans to eligible beneficiaries on highly subsidized interest rates to meet the expenses incurred towards purchase, construction, extension, and enhancement of houses by classifying them into four groups – Economically Weaker sections (EWS), Lower Income Group (LIG), Middle-Income Group (MIG) – I and II.
The amount of subsidy depends on the applicant’s income category and size of the property being financed. Here are some basic steps to follow for applying a home loan under PMAY:
Check your income category: To be eligible to apply for a housing loan under PMAY, you need to first check your income group listed as part of the scheme. The annual income must fall in the range of upto Rs. 3 lakhs for EWS category, between Rs. 3 lakhs and Rs. 6 lakhs for LIG category, between Rs. 6 lakhs and Rs. 12 lakhs for MIG-I category, and Rs. 12 lakhs and Rs. 18 lakhs for the MIG-II category. Also, the carpet area for the proposed construction should be within the permissible limits pertaining to each of the above target categories.
Complete the home loan application: Once you have checked your income category in accordance with the PMAY prescribed income categories, you may approach a preferred bank or NBFC and fill up the home loan application form. You need to furnish all the relevant financial details such as income and investment proofs, other loans, (if any), land or property details, and your co-applicant details.
Fill up the CLSS Application: In addition to the home loan application provided by the lender, you would have to fill up the application for Credit Linked Subsidy Scheme (CLSS) to avail the benefit of interest rate subsidy applicable as per your income category. The form can be accessed online from PMAY’s web portal and you can fill up the form upon verifying your Aadhaar details. A maximum loan amount of upto Rs. 6 lakhs, Rs. 9 lakhs, and Rs. 12 lakhs can be respectively availed by EWS/LIG, MIG-I and MIG-II categories, at an interest subsidy of 6.5 percent, 4 percent, and 3 percent respectively with a loan tenure of upto 20 years.
Submit the housing loan documents: The home loan application along with the CLSS application, and other documents like income proof, property related documents, and KYC documents must be submitted to the concerned bank or NBFC for further verification and processing. Once the home loan is approved, and if you are found eligible for interest subsidy under the PMAY scheme, the bank or NBFC shall credit the amount upfront to your home loan account, once the lender claims it from National Housing Bank.
Few Points to Consider
Before applying for a home loan under PMAY, it is important to consider a few points that can make or break your chances of availing the home loan:
- Whilst checking your income category, ensure that you or your immediate family members like spouse, parents or unmarried children don’t own a pucca house in India. Your application is liable to rejection if you or any of your immediate family already owns a pucca house.
- Women applicants are given priority and more so, if she is the sole breadwinner of the family.
- ● States/UTs, discretionarily notify a cut-off date that determines the applicant’s resident status in a particular urban area. If the applicant’s residency status meets the cut-off date set by the respective government, he/she is entitled to the PMAY scheme benefits. Ensure that you keep a tab on such notifications and cut-off dates for the area where you’d want to own a home.
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