Can I Apply for PMAY After Loan Disbursement?

Can I Apply for PMAY After Loan Disbursement?

Last Updated : Sept. 7, 2020, 10:27 a.m.

The Pradhan Mantri Awas Yojana (PMAY) was launched in 2015 to increase homeownership across the country. It is the flagship housing programme of the government of India and is aimed to provide ‘Housing for All by 2022’. What makes the PMAY attractive is that it comes with interest subsidy benefits on the home loan . With the subsidy, homeownership cost reduces significantly over time. The subsidy is given based on the income of the family.

Economically Weak Section (EWS) earning upto INR 3 lakh a year and Low Income Group (LIG) families earning upto INR 6 lakh a year, Middle Income Group-I (MIG-I) earning above INR 6 lakh and upto INR 12 lakh a year and Middle Income Group-II (MIG-II) having an annual income of more than INR 12 lakh and upto INR 18 lakh are eligible for PMAY subsidy. The subsidy scheme will be available for LIG/EWS till March 31, 2022, while that of MIG-I and MIG-II will last till March 31, 2021.

Now, the question that many could ask is whether they can apply for PMAY after loan disbursement. To know the answer, you will need to read this article further.

Is Application for PMAY Possible After Home Loan Disbursement?

Yes, you can apply for PMAY after the loan is disbursed. But you may need to do it very quickly else you might lose out on having PMAY benefits. Check with the bank or any other lending institution as to how later you can apply for PMAY after the loan disbursement. As you apply for PMAY, how will the process go on? Well, the concerned lending institution will forward it to the two nodal agencies – National Housing Bank (NHB) and Housing & Urban Development Corporation (HUDCO). These agencies will verify the income details of the applicant and his/her family members before deciding whether to award subsidy benefits or not. If you are found eligible, the agencies will notify the same to the concerned lending institution. Afterward, the subsidy gets credited.

Eligibility Criteria Regarding a PMAY Home Loan

The government of India has placed certain conditions that you need to meet so that you can receive the subsidy benefits on your PMAY home loan . Take a look at such conditions.

  • Beneficiary families comprising husband, wife, unmarried children can apply for PMAY home loan
  • Not a single member of the beneficiary family should have a pucca house on their name across the country
  • The beneficiary family must not have availed benefits of any government-sponsored housing scheme including the PMAY
  • If it is joint ownership of the home for married couples, the PMAY home loan interest subsidy will be given only once
  • The carpet area of the housing unit should be a maximum of 160 square metre (MIG-I) and 200 square metre (MIG-II)

How Will the PMAY Subsidy Work Out to Benefit Home Loan Borrowers?

The government of India introduced the Credit Linked Interest Subsidy Scheme (CLSS) in 2017 to give impetus to the affordable housing projects across the country. As per the scheme, MIG-I borrowers can get a 4% subsidy on the loan amount upto INR 9 lakh. Whereas, a subsidy of 3% will be granted to MIG-II borrowers on their PMAY Home Loan amount upto INR 12 lakh. The non-subsidized portion of the loan will have a normal home loan interest rate . The subsidy amount is disbursed based on the net present value (NPV). A discounted rate of 9% is applied to calculate the NPV. As per the calculation, the subsidy comes as INR 2,35,000 for MIG-I and INR 2,30,000 for MIG-II borrowers. Let’s check out the example to understand the benefits better.

Example – Sagar and Chandrakant apply for a PMAY home loan of INR 50 lakh each at 7.85% for 20 years. As the annual income of the Sagar’s family is INR 11 lakh, he will come under MIG-I. Whereas, the income of Chandrakant’s family is INR 15 lakh a year, so his PMAY home loan application will come under MIG-II. Let’s check out below the benefits for both Sagar and Chandrakant.

PMAY Home Loan Aspects Sagar Chandrakant
Original Loan Amount INR 50,00,000 INR 50,00,000
EMI Payable without Subsidy @7.85% INR 41,356 INR 41,356
Interest Payable without Subsidy @7.85% Over 20 Years INR 49,25,347 INR 49,25,347
Total Amount Payable without Subsidy INR 99,25,347 INR 99,25,347
Subsidy Amount INR 2,35,000 INR 2,30,000
Balance Loan Amount INR 47,65,000 (50,00,000-2,35,000) INR 47,70,000 (50,00,000-2,30,000)
EMI Payable After Subsidy @7.85% INR 39,413 INR 39,454
Interest Payable After Subsidy @7.85% INR 46,94,047 INR 46,98,972
Total Amount Payable After Subsidy` INR 94,59,047 INR 94,68,972
Savings in Terms of EMI Outgo INR 1,943 INR 1,902
Savings in Terms of Interest Outgo INR 2,31,300 (49,25,347-46,94,047) INR 2,26,375 (49,25,347-46,98,972)
Savings in Terms of Total Outgo INR 4,66,300 (99,25,347-94,59,047) INR 4,56,375 (99,25,347-94,68,972)

You can make such loan calculations in advance using the home loan EMI calculator and know the savings you are likely to have with a PMAY home loan.

Where Can You Apply for a PMAY Home Loan?

A host of public and private sector banks, housing finance companies, microfinance institutions have been approved to disburse PMAY-backed home loans to borrowers in India. Yes, it’s all there at popular banks such as State Bank of India (SBI), ICICI Bank, and the others. Hurry up, the scheme is just a few months away from getting expired unless the government extends it further.

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