Providing a push to affordable housing sector, the Prime Minister Narendra Modi made an announcement regarding to the subsidy scheme of PMAY. PM has doubled the loan amount for subsidy under central governments’s Pradhan Mantri Awas Yojana Urban (PMAY-U). In the speech, he also added to provide the 3 percent interest subvention on the loan amount upto Rs. 2 lakh for rural areas.
The scheme was launched in June 2015 to provide housing for all by 2022 and offered an interest subsidy at the rate of 6.5 percent for a loan amount of up to Rs 6 lakh. By increasing the loan amount the rate of interest subsidy has made been decreased. The loan amount has been increased upto Rs. 12 lakh with interest subvention of upto 4 percent.
“Two new middle income categories have been created under the Pradhan Mantri Awaas Yojana in urban areas. Loans of up to Rs 9 lakh taken in 2017, will receive interest subvention of 4 per cent. Loans of up to Rs 12 lakh taken in 2017, will receive interest subvention of 3 per cent,” the Prime Minister said on Saturday.
Further adding in the speech he said that “Loans of up to Rs 2 lakh taken in 2017 in rural area, for new housing, or extension of housing in rural areas, will receive an interest subsidy of 3 percent.”
Pradhan Mantri Awas Yojana now offers a rebate of 4% on Rs. 9 Lakh, 3% on Rs 12 Lakh under New Housing Scheme.
According to the source, the current home loan rates stands for at around 9 percent and an interest subsidy of 4 percent on loans of up to Rs 9 lakh means the effective rate of interest would be 5 per cent and, thus, substantial savings on EMI for individuals.
Illustratively: An individual taking a 15-year loan of Rs 9 lakh would save Rs 2,011 in EMI every month on account of 4 per cent lower interest rate as his EMI will come down from Rs 9,128 to Rs 7,117. Similarly, an individual taking a loan of Rs 12 lakh under the scheme will save Rs 2,044 in EMI on account of the 3 per cent lower interest rate.