Pradhan Mantri Awas Yojana

By: Makemymoney

How to apply for PMAY, Benefits of PMAY

The dream of every citizen of the country is to have an independent roof over their head. However, the realization of this dream, which is a necessity too, is not easy at all, given the skyrocketing prices of land and the rate of inflation. Though every middle-class person has to face this hardship, yet it is most challenging and demanding on the economically weaker sections of the society. This situation is more drastic and grim in Metro cities like Delhi, Mumbai or Bangalore.

A suitable home loan provider in Delhi can provide you with easy home loans. Since these loans are available at varying interest rates, from various financial agencies, it will be advisable and beneficial for the buyers to know and compare them, and choose from the best home loans available before purchasing a house.  A piece of more heartening news is that the internet has made it possible to apply for a home loan online. So, now you can buy your dream house with some comfort and ease by evaluating various home loans and its rates in Delhi. However, if your budget does not permit you to look at these options, Pradhan MantriAwasYojana is ideal for you.

Features of Pradhan Mantri Awas Yojana

This is a Credit-Linked Subsidy Scheme (CLSS) for Middle Income Group (MIG). The scheme is applicable for MIG-I and MIG- II category house aspirants. MIG-I category of houses is for those whose annual income is between Rs.6 Lakhs-12 Lakhs. MIG-II category of houses is for those whose annual income falls between Rs. 12 Lakhs -18 Lakhs.

Eligibility for Pradhan MantriAwasYojana – 

Particulars MIG-I – PMAY (U) MIG II – PMAY (U)
Household annual Income (Rs.) 6-12 lakh 12-18 lakh
Eligible Loan Amt for Interest Subsidy (Rs.) 9 lakh 12 lakh
Interest Subsidy 4% 3%
Dwelling Unit Carpet Area 160 Sq. mt. 200 Sq. mt.
Max loan tenure (in yrs) 20 20
NPV subsidy Rs 2.35 lakh Rs 2.30 lakh
1 sqmt = 10.7639 sqft    

Table source:

Terms and Conditions for selection:-

a). Since the goal of the scheme is to provide affordable houses to the economic weaker income groups of the society to the maximum, any person owning a house is ineligible. Similarly, even if one of their family members own a house in their name, cannot apply under this scheme.

b) For the selection in this scheme the family should not own a pukka house or the beneficiary should have not availed of any assistance under any housing scheme of the central government. A beneficiary’s family will include husband, wife, unmarried sons and unmarried daughters.

c) Beneficiary family members should also give their Aadhaar numbers in order to apply for the loan. 

d)  A member who is earning, (irrespective of marital status) can be treated as an independent house.

e) A married couple who lives on rent, even if their parents own a home, will be treated as a separate household. However, they will be eligible for a single house, bought by either of the spouses separately or jointly.

Calculation of subsidy under Pradhan Mantri Awas Yojana

Income Category Up to Rs 12 lakh
Original Loan (A): At 8.5 % for 20 years Rs 9 lakh
EMI Rs 7810
Total Interest (20 yrs) Rs. 9,74,498
NPV: After subsidy of 4% (B) Rs. 2,35,000
Reduced Loan (A-B) : At 9 % for 20 years Rs. 6,65,000
New EMI Rs 5,771
Total Interest (20 yrs) Rs. 7,20,045
EMI Saved Rs 2,039
Interest saved Rs. 2,54,453
Govt. Subsidy = B Rs. 2,35,000
Note: Discount rate for NPV 9%

For MIG – I category of households, individuals can get 4 percent interest subsidy on a loan not exceeding Rs.9 lakh. However, under the MIG – II category individuals will get a 3 percent subsidy on a loan not exceeding Rs.12 lakh. In case, you require an additional loan, the lender will provide it but the additional amount beyond the subsidized loan will be at a non-subsidized rate. 

NPV calculation of eligible loan for MIG – I category under PMAY(U):

Table source:

Income Category Up to Rs 18 lakh
Original Loan (A): At 8.5 % for 20 years Rs 12 lakh
EMI Rs 10,414
Total Interest (20 yrs) Rs 12,99,331
NPV: After subsidy of 3% (B) Rs. 2,30,000
Reduced Loan (A-B) At 8.5 % for 20 years Rs. 9,70,000
New EMI Rs 8,418
Total Interest (20 yrs) Rs 10,50,292
EMI saved Rs 1,996
Interest saved Rs 2,49,039
Govt. subsidy = B Rs. 2,30,000
Note: Discount rate for NPV 9%

NPVcalculation of eligible loan for MIG II category under PMAY(U)

Table source:

Calculation of subsidy:

Amount of interest subsidy will not be calculated as the differential of interest amount (of actual and subsided rate) but it will be the Net Present Value (NPV) of the amount of interest subsidy. Further, it should be calculated at a discount rate of 9 percent. For the calculation of NPV, you will need the loan’s amortization schedule because the interest portion of each equated monthly installment (EMI) has to be taken into account. The calculated interest subsidy will then directly transferred to the beneficiary’s bank account. The carpet area of the house is eligible for interest subsidy under MIG-Category has been isolated to be increased from 120 square meter to160 square meter, and, in respect of MIG-II from 150 square meters to 200 square meters.

Where to apply for Pradhan Mantri Awas Yojana:

Various State Cooperative Banks, Urban Cooperative Banks, Small Finance Banks, Non-Banking Financial Company, Scheduled Commercial Banks, Housing Finance Companies, Regional Rural Banks etc.can be approached to apply for the loan with relevant documents.

The economic impact of Pradhan Mantri Awas Yojana:

The scheme has managed to provide economic relief to the tune of 2.3-2.35 lakhs, to those middle-class families whose financial constraints cannot bear the attack of inflation but still wants to live a happy life together under one roof. Though there is definitely some scope to improve the scheme, it is proving to be an effective tool in bringing economic relief and justice to the financially weaker sections of the society. Therefore, more such welfare schemes are the need of the hour and are required to fight economic disparity, paving the way for a happy and prosperous nation.

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