Customer Journey of Availing (PMAY) - Housing Scheme - Home Loan Stories - Kotak Bank

13 AUGUST, 2019

How incredible it is when the government of a nation makes schemes to support and further the dreams of the people?

The Indian Government’s Pradhan Mantri Awas Yojana (PMAY) is one of such schemes intended to make housing affordable for all. With PMAY, the dream of having your own home seems more achievable for the general population of India. The PMAY scheme also has special provisions for salaried women, transgender individuals, widows, disabled persons and senior citizens. Moreover, the PMAY scheme is promoting affordable housing for the people belonging to the economically weaker section of the society and low-income groups.      

The Credit Linked Subsidy Scheme or CLSS varies according to the category under 4 different schemes which can be defined as follows-:

  • Economically Weaker Section (EWS) - Annual income upto Rs. 3,00,000
  • Lower Income Group households (LIG) - Annual income between Rs. 3,00,000 to Rs. 6,00,000
  • Middle Income Group I (MIG I) - Annual income between Rs. 6,00,001 to Rs. 12,00,000.
  • Middle Income Group II (MIG II) - Annual income between Rs. 12,00,001 to Rs. 18,00,000.


Eligibility for PMAY

As the scheme is intended to provide affordable housing for everyone, existing homeowner or any family member of an existing homeowner is not eligible for the benefits under PMAY. The family members of a homeowner excluded under the scheme of PMAY are husband, wife and unmarried children. However, any other adult member who does not own a house, regardless of his/her marital status, is eligible for PMAY scheme.
Structure of home loan subsidy

The subsidised rates for both categories are as follows,

  • EWS/LIG- 6.5% interest subsidy with maximum subsidy amount of Rs. 2.67 lakhs (approx.)
  • MIG I- 4% interest subsidy with maximum subsidy amount of Rs. 2.35 lakhs (approx.)
  • MIG II- 3% to interest subsidy with maximum subsidy amount of Rs. 2.30 lakhs (approx..)


How does the home loan subsidy work?

Assume, a person (MIG II) is willing to buy a house priced at Rs. 60 lakhs. Considering a downpayment of 20% (typically), translating to 12 lakhs, the balance of Rs. 48 lakhs can be arranged with the help of a home loan. Now, considering the PMAY scheme, 3% interest subsidy is eligible up to the amount of Rs. 12 lakhs in this category and the actual home loan interest rate would be applied on the remaining Rs. 36 lakhs.

Availing PMAY

Under PMAY, a home loan is available to any eligible Indian who wishes to buy a new house from a developer or purchase a “second-hand” one. It is also applicable for construction of a new house.
The PMAY scheme, has something for everyone, homebuyers and developers. Also, under PMAY, residential developers are mandated to construct environment-friendly housing with the help of eco-friendly technology and material.
Under PMAY, the Indian Government aims to build two crores homes in leading urban and rural areas, which will be made affordable for any eligible individual.

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Disclaimer: This Article is for information purpose only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. Bank make no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Newsletter. The information contained in this Article is sourced from empaneled external experts for the benefit of the customers and it does not constitute legal advice from Kotak. Kotak, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein.

Disclaimer: This Article is for information purpose only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. Bank make no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Newsletter. The information contained in this Article is sourced from empaneled external experts for the benefit of the customers and it does not constitute legal advice from Kotak. Kotak, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein.