Prime Minister Narendra Modi launched the PMAY or Pradhan Mantri Awas Yojana scheme in the year 2015. Under the slogan “Housing for everyone,” this program aims at providing better housing infrastructure to one and all in the country. The main objective is to improve the basic housing facilities especially the restoration of the slums, the introduction of Credit Linked Subsidy Scheme (CLSS), and to make housing more affordable for everyone, majorly the poor, lower-middle and middle income group. Under this program, Government of India has planned to offer cheap homes for the urban poor people by the end of 2022.
With the ongoing scheme, the applicants would get a home loan interest rate subsidy under this Pradhan Mantri Awas Yojana to purchase, build, expand, or upgrade their existing residence. To maintain a regulatory overview, both Housing & Urban Development Corporation (HUDCO) and National Housing Bank (NHB) will serve as the primary nodes for distributing subsidy funds to the lending institutions, and the same will be passed on to the end consumer. These lenders will then assist those qualified in getting the money as per the subsidy norms. Many people who belong to the Economically Weaker Sections (EWS) or Low-Income Groups (LIG) may benefit from the Credit Linked Subsidy Scheme if they are applying for home loans from any of the financial organizations that are engaged in the Pradhan Mantri Awas Yojana Scheme, so far it is the only scheme that provides subsidy for housing. A credit-linked subsidy may be used for residential development or to add a room to an existing home by qualified borrowers who are willing to avail funds via loans.
The objective of the PMAY Scheme:
Pradhan Mantri Awas Yojana – It is a Credit Linked Subsidy Scheme which has been established to assist the urban poor population by enhancing the flow of institutional credit to satisfy their housing requirements. Economically Weaker Sections and Low-Income Groups who apply for home loans from financial institutions and banks will be entitled to a 6.5 per cent interest subsidy for a period of 20 years or for the entire duration of the loans, whichever is shorter if the loans are repaid in full. Because of this interest rate subsidy, the beneficiary’s loan account will be credited at the early stage of the loan via the lending institution, resulting in a reduction in their Equated Monthly Installments (EMIs) from the beginning of the loan term.
The amount borrowed by the economically weaker sections can be used to build a new house from scratch, buy an apartment from a registered builder or expand their existing home by adding a room, a kitchen, or a balcony. The beneficiaries of this scheme are required to have an earning of up to Rs.3 lakh per year from various sources. For those beneficiaries with yearly income ranging from Rs. 3 lakh to Rs. 6 lakh are classified as the Low-Income Group under this scheme.
For the guidelines given for the covered area or carpet area of a house, the lower income group applicants may buy a house with the carpet area of up to 60 square metres, while the economically weaker sections can buy a house with the carpet area of up to 30 square metres. In addition to the subsidy as prescribed by the government, when it comes to EWS & LIG categories, the government has planned that the women, Scheduled Tribes, Scheduled Castes, backward classes, minorities, individuals with disabilities, and transgender people would be given precedence over the general population.
Who is eligible for the PMAY program?
PMAY eligibility is contingent on the fulfillment of these three requirements:
- The recipient family should not possess a pucca home in their name or the name of any member of their family in any part of the country, regardless of where the property is located
- For married couples, either one of the spouses or both together in joint ownership will be eligible for a single subsidy in the event of a single property, and in case one of them already own a house then the scheme would not be applicable
- The recipient household should not have received any central or state aid under any housing program run by the Government of India or the respective state government, nor should they have received any benefits prior to this instance, under any PMAY program
What is a PMAY subsidy calculator, and how does it work?
For all those who are looking to apply for a subsidy under this scheme, shall first get to know the details regarding the approval of subsidy and other terms & conditions. It is possible to better grasp the subsidies available under PMAY using the PMAY subsidy calculator, before you apply for the same. The PMAY subsidy calculator helps you avoid or get rid of all the manual mathematical calculations of the PMAY subsidy and instead apply for a loan and get the amount disbursed directly with just a few clicks.
To get the best of this calculator, all you need to do is to enter the details into the calculator, namely, the loan amount, the expected repayment tenure of the loan. The remaining calculations will be made by the PMAY subsidy calculator subsequently, and once it finished, you will get all the details for the PMAY subsidy regarding the amount and other details.
The PMAY scheme is divided into different categories:
To avail a subsidy under the Pradhan Mantri Awas Yojana scheme, a borrower is entitled to first determine the economic group that they fit into as per their yearly income.
The subsequent home loans are permitted under the PMAY plan under the following four categories:
- EWS Categorization – The EWS group, also known as the economically weaker section, is a term used for a household that comprises families with a yearly income of Rs. 3 lakh or lesser
- The LIG group – also known as the Lower Income Group, is a category defined for a household that comprises families with an annual income ranging between Rs. 3 lakh and Rs. 6 lakh according to the World Bank
- MIG I Classification – also known as the Middle Income Group (I), is a category defined for a household that comprises families with a yearly income ranging between Rs. 6 lakh and Rs. 12 lakh
- MIG II Classification – It is a sub-category provided for a higher middle income according to the United Nations Development Program. The Middle Income Group (II) is a category defined for a household that comprises families with an annual income ranging between Rs. 12 lakh and Rs. 18 lakh
What is the best way to use a PMAY subsidy calculator?
Whenever we hear about a public scheme or a policy provided by the Government of India, we start wondering whether the process of applying and receiving the same can be done without any external help or it would require a lot of documentation and approvals. With the use of advanced technology, now the entire process is online and can be availed with just a few clicks.
Are you curious about how to use the PMAY subsidy calculator correctly? Then you have come to the ideal place to get the answer to that question since below is all you should know regarding the operation of a PMAY calculator properly without any complications.
Firstly, you need to open the official website of the bank or PMAY and search for PMAY subsidy calculator and fill in the following details:
- Fill in the blanks with the amount of loan required to buy a house under a specific category
- Input the repayment tenure of the loan
After filling up the details mentioned above and there is no additional information required to process, you can click on calculate, and the anticipated calculations of your PMAY subsidy will be made automatically. As a result, the subsidy amount to which you are entitled will be shown on the screen with various lenders through which you can avail the home loan as well as the subsidy.
What is the formula for calculating the PMAY subsidy?
The subsidy on interest and the principal amount is calculated as per the Net Present Value (NPV) of the interest subsidy amount. The net present value (NPV) is made out by using a discount rate of 9 percent. You don’t have to worry about the details of this calculation since using a PMAY Calculator can help you reduce these complications.
For all the first time home buyers, the government has provided the best possible opportunity to support and aide the masses who have not been able to have a home of their own. For an individual to start with the process, this is all there is to know about the PMAY Scheme and the PMAY subsidy calculator and how it works. You can now easily calculate your PMAY subsidy with the above information if needed. For more details of the scheme, it is always recommended to visit the government portal and check the specifications of the scheme. Everything else has been provided above for your better knowledge and understanding.