A
Home Loan is usually taken to
build that much-wanted roof over your head. However, in India, with a sizeable
section of the population living below the poverty line, housing is often a
distant dream. The Pradhan
Mantri Awas Yojana (PMAY)has
been launched by the Centre to aid society’s economically weaker sections who have
an annual income below Rs. 3 Lakhs as also the Low income Group (LIG) with
annual incomes ranging from Rs. 3 Lakhs to Rs. 6 Lakhs to build their own
houses with the subsidy provided by the government.
One
important condition, however, is that those availing the benefits of the PMAY cannot
own a pucca building either in his own name or in the names of his wife
and/or unmarried children anywhere in India.
Features
and Benefits of the Pradhan Mantri Awas Yojana
Not only will the government provide a
suitable Home Loan Offer to a
deserving applicant to build their dream home, it will also ensure that he gets
the maximum benefits of the grant by way of more savings in the long run.
Here’s how.
Subsidy
to reduce EMIs: Interest rates for Home Loans are dependent on
numerous factors, notable among which are the Marginal Cost of Fund-based Lending
Rate (MCLR) and the repo rate. A Home
Loan with a higher interest rate, which determines your EMIs (Equated
Monthly Instalments), will obviously result in a higher monthly cash outflow.
With Home Loans being long-term commitments usually over a time span of 10-15
years or even more, a higher interest outflow comes with longer tenure.
This is where the PMAY makes a
difference by offering interest subsidy on a Home Loan, resulting in
substantial savings. The scheme stipulates that for the Economically
Weaker Section (EWS) and LIG categories, a loan of up to Rs. 6 Lakhs to Rs. 12 Lakhs
over a period of 15 years will get interest subsidies of 6.5% and 3%,
respectively. MIG or Middle-income group beneficiaries will be getting a
subsidy of 4% on loan amounts of up to Rs. 9 Lakhs for a 20-year tenure. Thus,
those belonging to the LIG or Middle Income Group (MIG) stand to save between
Rs. 1 Lakh to Rs. 2.3 Lakhs on loans taken from the PMAY. This is much lower
than the 8 to 10.5% that banks or NBFCs charge as interest rate for a Home Loan.
Eco-friendly
construction: The scheme clearly directs that all homes constructed under its
guidelines will have to compulsorily adopt green practices for their
construction. This will not only result in the building of quality spaces but
save 25-30% in energy consumption; 20-30% in consumption of water; and cut
waste generation by 50%. As these savings accrue over time, the house owner can
recover a sizeable portion of all expenses incurred when buying or building a
home by way of a loan. Moreover, green homes come with eco-friendly roofing
materials and windows which require reduced maintenance costs and living in
such spaces leads to better health, which in turn leads to further savings by
lower healthcare expenses.
Subsidy:
The
scheme will grant a subsidy to those
belonging to the LIG and EWS categories ranging between Rs. 1 Lakh to Rs. 2.3 Lakhs
to enable them to possess a house of their own.
Benefits
for the old and/or disabled: Under the scheme, ground floors will be
preferentially given for the benefit of the disabled and/or aged.
Pro-women
scheme: The PMAY has been
implemented to give preference to women when it comes to house allotment over
male beneficiaries. This has been done to improve the financial and living
conditions of women, particularly in the rural and semi-urban areas of the country.
Extension
or renovation: There are also specific provisions in the scheme to benefit LIG or EWS category applicants who already possess a house, which
needs repairs or extension. Additionally, funds are also available to those who
prefer building a new house on their own instead of buying a
government-constructed home. However, loans taken for renovation or extension
of an existing house will be granted to those LIG category applicants whose
house has a carpet area of 60 square meters. For EWS category applicants, the
carpet area of their existing house has to be 30 square meters, failing which
the loan cannot be sanctioned.
Slum
development: The scheme also stresses on the development of slum areas with
private participation. These projects would be executed primarily on
government-owned land.
In sum, the PMAY comes as a boon for the LIG, EWS and MIG categories of Indian
citizens who need a roof over their heads. Since it allows for considerable
savings, it would also enable them to take care of their other important goals
like their children’s higher education and marriage. They would also be able to
invest their savings in financial instruments like fixed deposits or mutual
funds to compound their wealth.
To apply online for Credit
Cards, Secured Loans and Unsecured Loans, visit www.mymoneymantra.com,
the leading online lending marketplace that offers financial products from 70+
Banks and NBFCs. We have served 2 million+ happy customers since 1989.
Talk to our Loan
Specialists toll-free at 1800 103 4004 to know more about our products
and offers.
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