- Can an Individual avail PMAY Benefits even after the Balance Transfer Facility?
- Know the answer to this question and the amount of money you can save by applying for PMAY
A lot of people who want to switch their high-interest home loans to a different lender at low-interest rates opt for Home Loan Balance Transfer Facility. So how does this facility help? With this, borrowers can transfer their outstanding loan balance to another lender who is providing a lower interest rate. It helps them reduce their EMI amount and interest outgo. But since June 25, 2015, when the Government of India launched Pradhan Mantri Yojana (PMAY), a lot of customers have this question in mind – Can they Apply for PMAY after Home Loan Balance Transfer Facility?
The answer to this question is: Yes, an individual can apply for PMAY even after availing the Home Loan Balance Transfer Facility. But the first and foremost condition to apply for PMAY is an individual must have taken this Home Loan after June 2015. Let’s understand this in simple terms: Suppose you took a home loan in January 2014. After four years, in January 2018, you decided to opt for the Balance Transfer Facility. Now, you want to apply for PMAY on your home loan, which won’t be possible. The reason is clear – You took the Home Loan before June 2015, when PMAY wasn’t even launched.
In this article, we will cover several things related to PMAY and Balance Transfer Facility such as what are the lenders who provide Balance Transfer at low-interest rates, conditions to get PMAY, how much money you can save by applying PMAY after Balance Transfer facility. So, let’s get to it.
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Top Lenders Providing Balance Transfer Facility at Lowest Interest Rates
As we said that an individual can apply for PMAY after the Balance Transfer facility provided he or she has taken the home loan after June 2015. When going for a Balance Transfer Facility, it is important to choose a lender that offers affordable interest rates so that you can save money on EMI amount and interest outgo. But before knowing this, it is important to know what PMAY provides to customers?
The main objective of the PMAY scheme was to provide ‘Affordable Housing for All’ by 2022, especially for the people coming from the Middle-class and Economically Weaker Section (EWS) living in the Urban Areas. This scheme is only for those customers who are buying their homes for the first time. When they apply for the PMAY scheme, they can get the subsidy on the Home Loan interest amount. It is available to Middle Income Group-1 (With Annual Income of INR 6 lakh to INR 12 lakh) and Middle Income Group-2 (With Annual Income of INR 12 lakh to INR 18 lakh), Low Income Group (LIG) and Economically Weak Section (EWS).
So, you can understand how much money an individual can save by applying for PMAY when he or she has availed the Balance Transfer Facility. However, you need to keep this fact in mind that lenders do not usually give preference to such borrowers. Instead of this, they are more likely to provide PMAY Home Loan to fresh borrowers.
Now you have the basic knowledge about the PMAY, it’s time to know the lenders that provide affordable interest rates to customers. We are showing some of the lenders that provide the same. Please have a look.
|Lenders||Home Loan Balance Transfer Rates (in per annum)|
|State Bank of India (SBI)||6.70%-7.30%|
|Axis Bank||6.90% - 8.55%|
|ICICI Bank||6.75% - 7.55%|
|Citibank||6.65% - 7.40%|
|LIC Housing Finance (LIC HFL)||6.66% - 7.90%|
|Tata Capital||6.90 - 8.75%|
|Indiabulls Housing Finance||8.65% Onwards|
|Bank of India||6.95% - 8.35%|
|PNB Housing Finance (PNBHFL)||7.35% - 9.05%|
|Piramal Capital & Housing Finance (PCHF)||9.65% Onwards|
As we said lenders are likely to offer PMAY to fresh borrowers instead of customers who have already a home loan and also availed the Balance Transfer facility. However, when are you going for a Balance Transfer facility, there are a few things that you need to remember. First, you should opt for the Balance Transfer facility in the initial repayment years so that you can ensure maximum savings on a home loan. Second, your repayment behavior must be good which means you should have been paying all your Home Loan EMIs on time. Third, the lender will also check your property location and value to make the final decision.
What are the Conditions to apply for the PMAY?
Now, you have known about the best lenders that provide affordable Balance Transfer facility, it’s time to know the conditions to apply for PMAY. As we have already said that you can apply for PMAY after a balance transfer facility, it’s important to know if you are eligible for the PMAY or not. That’s why we are showing all conditions to apply for PMAY below. Please have a careful look.
- The PMAY scheme can be availed by the Economically Weaker Section (EWS) and Lower Income Group (LIG), Middle Income Group-1 and Middle Income Group-2 with an annual income of INR 6 to 12 lakh and INR 12 to 18 lakh respectively. So, the annual income of the applicant who wants to apply for PMAY and avail the benefits should fall in this annual income bracket of INR 6 to INR 18 lakh.
- For the MIG-1 Category, the government will provide a subsidy on interest at 4% per annum to and 3% per annum to the MIG-2 category.
- The subsidy is given on the loan amount of upto INR 9 lakh for MIG-1 and INR 12 lakh for MIG-2. According to this, MIG-1 customers can get a maximum subsidy amount of INR 2.35 lakh, while it is fixed as INR 2.30 lakh for MIG-2 customers.
- PMAY is only available to those borrowers who are buying their homes for the first time. Other than this, they should not own any other Pucca House if they want to get the interest subsidy.
- The beneficiaries must not have availed any of the benefits or central assistance from any different housing scheme before applying for PMAY. The scheme can be either from the Central or State Government.
- A Beneficiary family will include Husband, Wife, Unmarried Daughter/s, or Son/s. While applying for the PMAY, all the family members will need to provide their respective Aadhaar Numbers.
- The property an individual wants to purchase should belong to one of the areas, villages, towns, or cities as per the Census 2011.
How much Money can You Save via Applying for PMAY after Balance Transfer Facility?
The primary objective of the Balance Transfer facility is to reduce the EMI amount and interest outgo. And after applying for PMAY, you can save even more because of the interest subsidy upto INR 2.35 lakh you will get. So, let’s understand this with an example.
Suppose an individual (with an annual income of INR 8 lakh) opted for a home loan of INR 30 lakh for 15 years at an interest rate of 8.75% per annum. For this amount, he must be paying INR 29,983 as the EMI amount. Now, after 4 years, the individual wants to opt for the Balance Transfer at an interest rate of 7.40% per annum. Let’s see how much money he can save in the below table.
|Existing Loan Amount||INR 30 lakh|
|Interest Rate||8.75% per annum|
|EMI at the current interest rate of 8.75% per annum||INR 29,983|
|Estimated Interest Outgo at 8.75% per annum||INR 23,97,023|
|Interest Paid till now ( 4 Years )||INR 9,75,198|
|Outstanding Balance at the end of 4 years||INR 25,35,992|
|EMI at the new interest rate of 7.40% per annum||INR 28,137|
|Interest Outgo at the new interest rate of 7.40% per annum||INR 11,78,050|
|Interest Paid till now + Interest for the remaining 11 years||INR 21,53,248|
|Estimated EMI Saving||INR 1,846 (29,983 - 28,137)|
|Estimated Interest Savings||INR 2,43,775 (23,97,023 - 21,53,248)|
From the above table, you can clearly see that by opting for the Balance Transfer Facility, an individual can save INR 1,846 per month on the EMI amount and INR 2,43,775 on overall interest payments. Any person who wants to save a maximum amount on a home loan, the Balance Transfer facility could be a suitable option for him or her.
Now, after applying for the Balance Transfer Facility, when the individual will apply for PMAY, he/she will get the interest subsidy of INR 2.35 lakh via Credit Linked Subsidy Scheme (CLSS) into his or her Home Loan Account. So, let’s see how much more money the individual can save after receiving the PMAY Subsidy. All of the details are in the below table. Please have a look.
|Outstanding Principal Balance||INR 25,35,992|
|Subsidy Amount||INR 2,35,000|
|New Loan Amount after receiving the Interest Subsidy||INR 23,00,992|
|Home Loan Interest Rate||7.40% per annum|
|New EMI Amount||INR 25,529|
|New Interest Outgo||INR 10,68,885|
|Estimated EMI Savings||INR 4,454 (29,983 - 25,529)|
From the above table, it is pretty clear that an individual can save almost INR 4,554 per month in the EMI amount by applying for PMAY after availing the Balance Transfer Facility.