There is a very good news for the home seekers, central government has announced even more subsidy in home loan interest rates under Pradhan Mantri Awas Yojana. Prime Minister Narendra Modi announced the interest subsidy on housing loans taken under Pradhan Mantri Awas Yojana during his speech to the nation on 31st December 2016.
The amount of home loan under the scheme has been increased by double to 12 Lakh and the interest subsidy would now be up to 4%. Below is the interest subsidy comparison of earlier PMAY scheme and revised scheme.
PMAY Home Loans Interest Rates/Subsidy for 2017
| Subsidies Explained | Earlier Scheme (2015) | Revised Scheme (2017) – Additions | |
|---|---|---|---|
| Loan Amount | Up to Rs. 6 Lakh | Up to Rs. 9 Lakh | Up to Rs. 12 Lakh |
| Eligibility Criteria | EWS (Annual income of Up to Rs. 3 Lakh) and LIG (Income of up to Rs. 6 Lakh per annum). Women to be the co-owner along with the beneficiary. | Income criteria not defined, Middle Income Group has been included which will result in increased number of borrowers. | |
| Subsidy Calculation for a loan tenure of up to 15 years | 6.5% | 4% | 3% |
| Subsidy Amount | Rs. 2.2 Lakh for a loan of 6 lakh | Rs. 1.94 Lakh for a loan of Rs 9 Lakh | Rs. 1.91 Lakh for a loan of Rs. 12 Lakh |
| Changes Likely in EMI’s | |||
| Interest Rate | 10.5% | 8.5% | |
| Loan Amount | Rs. 12 Lakh | Rs. 12 Lakh | |
| Amount Eligible for Subsidy | Rs. 6 Lakh | Rs. 12 Lakh | |
| Subsidy Rate | 6.5% | 3% | |
| Subsidy Amount | 2.2 Lakh | 1.9 Lakh | |
| Effective EMI for 15 years without subsidy | Rs. 13264 | Rs. 11,817 | |
| Effective EMI for 15 years with subsidy | Rs. 10,428 | Rs. 9,931 | |
The increased loan amount under the PM Awas Yojana will significantly reduce the monthly installments. The central government instead of 6.5% subsidy on loans up to Rs. 6 Lakh, now providing 4% subsidy on loans up to Rs. 9 Lakh and 3% for home loans up to Rs. 12 Lakh. The loans under PMAY can be availed for a maximum tenure of 15 years. The government has also introduced two new middle income group categories under the scheme.
At present, the home loans are available from banks and non banking financing companies at interest rates of about 9%. After the interest subvention of 4%, the effective interest rate would fall to 5% which will result in significant reduction in EMI’s.
PMAY Home Loan Interest Rate Calculation
For example, if an individual takes loan of Rs 9 lakh for a 15 years, 4% lower interest rate would save him Rs. 2,011 in EMI every month as his EMI will come down from Rs 9,128 to Rs 7,117. Similarly, on a loan of Rs 12 lakh will save Rs 2,044 in EMI on account of the 3 per cent lower interest rate.
Online Applications for Pradhan Mantri Awas Yojana – Urban are being invited through CSC’s and official website at pmaymis.gov.in.
The central government is also providing interest subvention of 3% on home loans taken in 2017 for new home construction or renovation under PM Awas Yojana – Gramin.
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