1. Pradhan Mantri Awas Yojana (PMAY) caters to urban centres and was launched in the year 2015 with an aim of providing ‘Housing for All by year 2022’.
2. In 2017, the scope of the PMAY was broadened by the introduction of the Credit Linked Subsidy Scheme (CLSS) . Under the scheme the Government of India is offering interest subsidy on home loans taken by eligible citizens for buying or constructing a house. Furthermore,the scheme brings down the outstanding loan amount right at the time of loan origination.
3. It is for the first time under the scheme that any national government has recognized the Middle Income Category (MIG) as the ones needing some sort of financial support in their quest for a home.
4. The Credit Linked Interest Subsidy Scheme (CLSS) for Middle Income Group widens the scope of people who qualify as beneficiaries. People earning above Rs 6.00 lakh and up to Rs 18 lakh per annum are eligible for interest subsidy on housing loans.
5. The following percentage of interest subsidy is available if the criterion are met:
– 4% on housing loans of up to Rs 9 lakh of those with an income of INR 6 to 12 lakh a year (MIG 1 Category)
– 3% on housing loans of up to Rs 12 lakh of those earning INR 12 to 18 lakh per annum (MIG 2 Category)
6. Irrespective of one’s amount of loan, as long as the unit sizes comply with the norms laid down, the beneficiaries will avail the interest subsidy under the CLSS up to the limits described above. The norms for the unit sizes are: 90 sq. m. for MIG1and 110 sq. m. for MIG 2. These are carpet area of the unit that is being purchased.
7. The interest subsidies will bring down the Equated Monthly Installments (EMI) of beneficiaries by a certain amount per month. The government will provide direct transfer of these savings over the life of the loan as a one-time benefit at the time of loan origination. Assuming the normal housing loan rate to be fixed at 8.65% on a 20 year loan, the potential savings are:
-Rs 2.35 lakh on a loan of Rs 9.00 lakh in the MIG 1 category
-Rs 2.30 lakh on a loan of Rs 12.00 lakh in the MIG 2 category
8. The home loan that one avails to qualify under the scheme will be for tenure of 20 years or lower.
9. The criteria to qualify under the PMAY CLSS scheme are: a) one should be a first time home buyer; b) the income should be as per the aforementioned limit and c) the dwelling sizes should comply with the norms.
10. The interest subsidy is applicable only to the amount limit mentioned in the scheme. If the loan amount is more, interest on the remaining amount is applicable as per contract.