PMAY – Buying a home is everyone’s dream. Now, making this dream a reality isn’t easy. However, the Modi government’s Pradhan Mantri Awas Yojana (PMAY) remains a ray of hope for urban residents. The scheme launched an Interest Subsidy Scheme (ISS). This scheme provides an interest subsidy of up to 4% on home loans for families in the economically weaker section (EWS), low-income group (LIG), and middle-income group (MIG).
Families with annual incomes up to Rs 3 lakh (EWS), Rs 6 lakh (LIG), and Rs 9 lakh (MIG) will be eligible for this scheme. The scheme is divided into four categories, Beneficiary-Led Construction (BLC), Affordable Housing in Partnership (AHP), Affordable Rental Housing (ARH), and Interest Subsidy Scheme (ISS). The maximum subsidy under the Interest Subsidy Scheme is Rs 1.80 lakh.
This amount will be transferred directly to the loan account via Direct Benefit Transfer (DBT) in five installments. The condition is that the loan is active and more than half the loan amount is outstanding. The bank will deduct this subsidy directly from the loan principal, automatically reducing the borrower’s EMI. This scheme will only benefit families who do not already own a permanent home in any city or village.
Simply put, if a family takes out a home loan of up to Rs 8 lakh, the interest subsidy will reduce the loan cost by approximately Rs 1.8 lakh. This subsidy will only be available on the first Rs 8 lakh of the loan. This means that even if you take out a home loan of Rs 10 or Rs 12 lakh, the subsidy will only be available on up to Rs 8 lakh. This subsidy will be provided by reducing the interest burden and is calculated over a period of 12 years.