All You Need to Know About PMAY

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Pradhan Mantri Awas Yojana 2021

Pradhan Mantri Awas Yojana Scheme or PMAY has been introduced to make housing more affordable for Indian citizens. This scheme aims to promote the concept of ‘Housing For All’ and envisions building 2 crores houses across both urban and rural India. PMAY is meant to make housing plans for those who belong to lower economic and social backgrounds. If you are considering buying a house under PMAY, then there are certain things you need to be aware of. Here is all you need to know about the PM Awas Yojana 2021.

Who are eligible?

Since the primary motive of this scheme is to provide everyone with their own house, anyone who already owns a house or has a family member who owns a house, cannot benefit from this scheme. According to the center’s guideline, the beneficiary family must not have availed central assistance under any government housing scheme, as well.

Mostly, families consisting of husband and wife with married or unmarried sons or daughters can apply for this scheme given that they do not already own a house. However, married couples can also apply for this scheme even if their parents own a house provided that they meet the prerequisite criterion. The house will be bought in either the husband’s name or the wife’s or under joint ownership.

In case the children in a family wish to own their own home but are not married, they too can apply for this scheme provided that they have an income already and do not have a house to their name in any part of India.

Subsidy

A person belonging to the MIG I category can get up to a 4% interest subsidy on a loan of up to Rs. 9 lakhs. On the other hand, a person belonging to MIG II can get up to a 3% interest subsidy on a loan of up to Rs. 12 lakhs. In case, the person needs a loan of a bigger sum, the lender will provide it, but the additional amount will be given at a non-subsidized interest rate. 

Loans under PMAY

Under PMAY, a person belonging to the MIG category can acquire a new house from any source whatsoever. They can use the loan to pay off the developer, builder or if he so wishes, he can repurchase a house from the secondary market. Even if a person wishes to construct a house from scratch, he can use a loan under PMAY for that purpose.

If someone wishes to enhance or extend a portion of their already existing house, they too can apply for PMAY. A lender cannot turn down a person who applies for the loan for the expressed purpose of building a toilet, kitchen, or another floor to their already existing house.

Home Area

The home area stated under PMAY is different for each category. For this purpose, the carpet area is essentially taken into account. The carpet area is the area enclosed by four walls of the room. It does not take into account the thickness of the walls, the stairs, or the balcony areas. For MIG I, the carpet area is supposed to be 90 sq meters. On the other hand, the carpet area for MIG II is supposed to be 110 sq m.

However, in 2018 the carpet area restrictions were revised and approved by the Ministry of Housing & Urban Affairs. Under PMAY, the carpet area for MIG I is supposed to increase from “120 square meters” to “160 sq meter” and for MIG II, the carpet area is supposed to increase from “up to 150 sq meter” to “ up to 200 sq meter”.

Where can one avail of subsidized loans?

To avail of PMAY, one can approach any primary loan lending financial institutions, commercial banks, and housing finance companies. There is no processing charge applied on these loans. If one wishes to get a loan of a larger sum, the lender will apply a non-subsidized interest rate beyond the subsidized amount. 

CLSS or Credit Link Subsidy Scheme

The government initially approved and implemented Credit Link Subsidy Scheme or CLSS in 2017 for Middle Income Group MIGI and MIGII. The scheme was supposed to expire in March 2020 but on 14th May 2020, an announcement was made to extend this scheme up to March 2021. 

The middle-income Earner Category

The Middle Income Group is a new category of the PM Awas Yojana 2021 that can be further divided into two groups. People belonging to households earning annually above Rs. 6, 00,001 and below Rs. 12, 00,000 will be grouped into MIG I. Households annually earning above Rs. 12, 00,001 and below Rs. 18, 00, 000 will be grouped into MIGII. Therefore, anyone whose annual earning is between Rs. 6, 00,001 and Rs. 18, 00, 000 can avail of these schemes given that they meet all the other requirements.

It is speculated that not many people belonging to MIG I will be applying for PMAY given the atrocious prices of building a house in an urban area. In such a situation, a benefit of Rs. 2.3 lakh or Rs. 2.5 lakh may not seem that beneficial or attractive. However, if the government does away with the carpet area restriction of 90 sq meters / 110 sq meter, it may boost the appeal of this scheme.