Update on December 31, 2018: The Centre has extended the Credit Link Subsidy Scheme (CLSS) on home loans for the middle income group (MIG) under the Pradhan Mantri Awas Yojana (Urban) till March 2020, union housing and urban affairs minister Hardeep Singh Puri announced, on December 31, 2018. Addressing a press conference, Puri said he had signed the file pertaining to the extension of the CLSS, under which the government provides a subsidy of up to Rs 2.67 lakhs on home loans.
Till December 30, 2018, around 3,39,713 accounts have availed of the CLSS under the PMAY (Urban). The CLSS for the MIG launched initially been for a year till December 31, 2017, covered accounts seeking home loans for the construction of houses (including re-purchase) from banks, housing finance companies, and other such institutions. Under the CLSS, the MIG beneficiaries with an annual income of above Rs six lakhs and up to Rs 12 lakhs, would get an interest subsidy of four percent on a 20-year loan component of Rs 9 lakhs. Those with an annual income of more than Rs 12 lakhs and up to Rs 18 lakhs, would get an interest subsidy of three percent.
The government has been supportive of the cause of housing, through its ‘Housing for All by 2022’ plan. Under this mission, the government has come out with two schemes, to fund the interest of the borrowers in urban areas partly. The first scheme, which is very liberal regarding the interest rate subsidy, applies to the Economically Weaker Sections (EWS) and those under the Lower-Income Group (LIG). The other scheme covers the Middle-Income Group (MIG). Let us discuss the first scheme in detail.
The single category dividation is into two parts – the first category is EWS, and the other class is LIG. This scheme is available for acquisition or constructing residential units in the 4,041 small towns as per the 2011 census and 274 new cities, which have indiviually been notified by the state government. The details of such towns can be saved from http://nhb.org.in/government-scheme/pradhan-mantri-awas-yojana-credit-linked-subsidy-scheme/statutory-towns/
To qualify for the subsidy, the individual should not own an all-weather brick house, either in his/her name or in the name of an unmarried child of the couple, in any part of India. In addition to construction of a new house, a borrower can also avail of this facility for extension of his existing home, whether self-acquired or inherited. If the borrower wants to get the benefits, for expansion or enhancement of his current house for the addition of rooms, kitchen, toilet, etc., then, the condition of pre-existence of a pucca house, shall not apply.
Moreover, the income to qualify under the scheme is the income of the whole family as a whole and not of the head of the family only. For availing of the subsidy, the borrower has to give a self-declaration, about the income and title of the property to be acquired, to the lender. As the government does not underwrite any part of the loan given under this scheme, lenders will have to follow their own due diligence process, for income and title of the property. The lender has to monitor the construction of the dwelling units financed under the scheme, like approvals for the building design, infrastructure facilities, the quality of construction, etc. The lender also has to verify the expenditure incurred up to different stages of development, through site visits, etc.
The house which qualifies for the subsidy, can either be a single unit or a unit under any multi-storeyed building. The eligible group needs to have basic facilities and infrastructure like the toilet, water, sewerage, road, electricity, etc. The area of the house will only have the area on which a carpet can be laid, meaning that it will not cover the walls in the house or the outer wall of the home.
The house to be acquired under this scheme should be in the name of the female head of the household or the joint name of the male head of the home and his wife. However, if there is no adult female member in the family, the house can be acquired in the name of the male member of the family.
The income eligibility and interest rate of subsidy available and the exact quantum of benefits under PM Awas Yojana are listed as under:
|Annual family income||Up to Rs 3 lakhs||more than Rs 3 lakhs and up to Rs 6 lakhs|
|House area||Carpet area up to 30 sq meters||Carpet area up to 60 sq meters|
|The rate of interest subsidy||6.50%||6.50%|
|A maximum loan eligible for support||Rs 6 lakhs||Rs 6 lakhs|
|Maximum loan tenure||20 years||20 years|
The maximum comfort under this scheme can be Rs 2,67,280. The value of subsidy will be declined proportionately if the loan is lower than Rs 6 lakhs. The subsidy benefit is only available for loans that are disbursed on or after June 17, 2015.