PM’s PMAY scheme to come to the rescue of low income groups

In an attempt to boost the demand for houses in the affordable and middle income category, the government has announced an interest subvention for home loans taken under the Pradhan Mantri Awas Yojana (PMAY) in 2017. Prime Minister Narendra Modi, doubled the quantum of loan amount eligible for interest benefits under this scheme.

When the ‘Housing for All’ scheme was launched in 2015, beneficiaries were offered an interest subsidy at the rate of 6.5 percent, for a loan of upto 6 lakhs. The scope of scheme has now been revised. Henceforth, borrowers will be offered an interest subvention of 4% on loans of upto 12 lakhs. The Pradhan Mantri Awas Yojana now comprises two new middle income categories in the urban areas:


              Loans of upto 9 lakhs taken in 2017 will receive interest subvention of 4 percent

              Loans of upto 12 lakhs taken in 2017 can enjoy an interest subvention of 3 percent.


The current interest rate on home loans is 9 percent. For loans taken upto 9 lakhs, a 4 percent interest subsidy will considerably bring down the interest rate to 5 percent, thus helping people save substantially on their EMIs.

For eg: If a person takes a 9 lakh rupees loan for a period of 15 years, under the PMAY, the EMI rate will drop down from 9,128 to 7,114, helping him save Rs. 2011 every month. Similarly, an individual opting for a loan of upto Rs 12 lakh will save Rs. 2,044 on EMI due to the 3 percent reduced interest rate.

Further to the benefits of PMAY, loans taken of upto 2 lakhs, in rural areas, would be given an interest subvention of 3%. The loaned amount could be used to purchase a new house or in the building and expansion of existing homes.

This new scheme by the PM has been received warmly by banks and housing finance companies. The Government has conveniently helped reduce the EMI cost against the cost of rents. This move is definitely a great decision to motivate people to invest in their own homes and a direct step to realise the dream of ‘Housing for All’ objective, as envisioned for 2022. It will bring a lot of families from the Economically Weaker Sections (EWS) and Lower Income Group (LIG) under the purview of this scheme, thus propelling them to move from rented homes into their own.

Apart from this move, the government has also planned to increase the number of homes to be built in the semi-urban areas by 33 percent. This will help expand the circumference of all the eight metro cities. Localities like Bhiwandi, Nimrana, Daruhera on the outskirts of cities like Mumbai, Pune, Ahmedabad, Bangalaore, will see a surge in the demand for housing, where the average price of homes falls anywhere between Rs. 10 and 12 lakh. 


The proposal has brought great relief to those who always wanted to invest in their dream homes but were boggled down by preposterously high interest rates. 

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