Still to Buy Your First Home? CLSS PMAY Scheme is Here to Help You

Nothing beats the happiness of having your own home, right! The amount of freedom and liberty that home offers can’t be counted in words. Many of you, I guess, would still be searching for your first house. But the surging interest rate is making it an expensive affair to own a home.

If that is the case, then Pradhan Mantri Awas Yojana (PMAY) is right here to let your feet drop into your dream home at a much lower cost than otherwise. I am sure, you must have heard about this. It is the ambitious flagship housing program of the government aimed towards the accomplishment of ‘Housing for All by 2022’. Now, you must be wondering how can PMAY help you? Well, it has come up with a bundle of interest rate concessions for first-time home buyers, catering to different income groups of the population.

PMAY has come with Credit Linked Subsidy Scheme (CLSS), offering greater relief to home loan borrowers with reduced interest rates. So, why not choose this moment and understand CLSS PMAY Scheme to step into our dream home?

What’s in Store for Home Loan Borrowers with CLSS PMAY Scheme?

PMAY scheme has come with three components- CLSS EWS/LIG, CLSS MIG-I and CLSS MIG-II. All these components are decided on various income levels of the borrowers looking to avail a loan to buy or construct a house. The maximum loan tenure offered in each of the components is 20 years. But there are specific information pertaining to these components, which I reckon, would need a patient reading. Let’s scan these components one-by-one and find out the benefits that are waiting for you to grab.

CLSS EWS/LIG (Assuming Loan Tenure of 20 Years and Normal Interest Rate of 8.95% p.a.)

People belonging to economically weaker section (EWS) and low-income group (LIG) can avail home loan under PMAY and get an interest subsidy of 6.5% on loan amount of 6 lakhs for a tenure of 20 years. The excess loan amount will be serviced at the normal interest rate charged by the financial institution.

For example- If you belong to the said category and want to avail a PMAY-backed home loan of ₹12 lakhs from a lender charging an interest rate of 8.95% per annum. In that case, the EMI and total interest outgo would be ₹8,544 (3,165+5,379) and ₹8,50,535 (1,59,557+6,90,978). While the first part of EMI is computed based on the interest rate concession of 6.5%, reducing to 2.45% on ₹6 lakhs. The second part of EMI comes at a normal rate of 8.95% on the remaining loan of ₹6 lakhs. Similarly, the first portion of the interest outgo is a result of concessional interest rate, while the second one arrives at a normal rate offer.

In the absence of CLSS EWS/LIG, the EMI and interest repayment would be ₹10,758 and ₹13,81,957, respectively. On comparison, you can see a saving of ₹2,214 in EMI and ₹5,31,422 in interest repayment by availing CLSS EWS/LIG.

CLSS MIG-I  (Assuming Loan Tenure of 20 Years and Normal Interest Rate of 8.95% p.a.)

CLSS MIG-I caters to home loan requirements of people falling in the income of over 6 lakhs to 12 lakhs a year. Here, a 4% interest subvention would be offered on a principal home loan of ₹9 lakhs and the remaining would get serviced at a normal rate of interest. If you apply for a home loan of ₹25 lakhs under PMAY at a lender offering at 8.95% interest rate, you will receive an interest subsidy of 4% i.e. 4.95% per annum on ₹9 lakhs. The remaining loan of ₹16 lakhs would come at 8.95%. Taking these into account, the EMI and interest outgo would be ₹20,259 (5,915+14,344) and ₹23,62,154 (5,19,545+18,42,609) over a 20-year term.

In the lack of CLSS MIG-I, the EMI and interest repayment would jump to ₹22,413 and ₹28,79,077, respectively. A lower EMI and interest liability of ₹2,154 and ₹5,16,923, respectively, results with CLSS MIG-I.

CLSS MIG-II  (Assuming Loan Tenure of 20 Years and Normal Interest Rate of 8.95% p.a.)

Those earning over ₹12 lakhs to 18 lakhs come under CLSS MIG-II category. The borrowers falling in this category are supposed to pay the home loan at 3% lower interest rate on a principal amount of ₹12 lakhs. The remaining loan portion would have to be repaid at a normal rate. Let’s suppose you belong to CLSS MIG-II and want to apply for a loan worth ₹40 lakhs at a lender whose normal interest rate is 8.95% per annum. The repayment of first ₹12 lakh loan would happen at 3% lower interest rate i.e. 5.95%. The remaining  ₹28 lakh would get repaid at 8.95% rate. In this way, the EMI and interest repayment would work out to be ₹33,665 (8,563+25,102) and ₹40,79,589 (8,55,023+32,24,566). If you opt for a home loan without availing CLSS MIG-II, the EMI and interest repayment would surge to ₹35,861 and ₹46,06,523, respectively.

So guys, what have you decided? Won’t you go for CLSS PMAY Scheme that saves your EMI by above ₹2,000 and interest by a massive ₹5 lakh over the course of 20 years? I am sure, you will. There are several lending institutions, including banks and housing finance companies, which have inked an agreement for the successful implementation of the Scheme. With CLSS PMAY Scheme, your dream home, which was earlier beyond your reach, is falling well within your budget, giving you plenty of reasons to smile.