Know About Pradhan Mantri Awas Yojana

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All about the Pradhan Mantri Awas Yojana (PMAY)
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• In India, approx 12 million people are being
  added to the workforce every year. This means,
  young, educated aspirational workforce is
  moving from villages to towns and from towns to
  cities in search of better job opportunities. In
  economic language, this phenomenon is known as
  urbanization. Urbanization in India is growing at
  a rapid pace.
• Estimates suggest that by the year 2030, the
  urban population of India will reach 600 million.
  In recognition of the crying need for housing
  in view of rapid rate of urbanization, the
  Government launched the Pradhan Mantri Awas
  Yojana (PMAY). This scheme is a part of the
  Governments ambitious Housing for All scheme
  that aims to ease the demand for housing in
  cities by building 20 million houses by the year
  2022.

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Making affordability of houses a reality

• The PMAY has been framed considering the
  constraints of the urban poor and the
  middle-income group in mind. These are
  individuals who dream of having a house of their
  own, but are often unable to do so because of the
  lack of resources and their inability to obtain a
  loan at an affordable home loan interest rate. To
  address this particular issue, the Government
  introduced the Credit-Linked Subsidy Scheme
  (CLSS) for the people belonging to Middle Income
  Group (MIG).
• Also read Affordable Housing in India in afinozs
  blog section.

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• For convenience, the MIG has been subcategorized
  as MIG I and MIG II. Households having an annual
  family income of Rs 6 to 12 lakhs fall under MIG
  I whereas, households with an annual income of Rs
  12- 18 lakhs fall under MIG II. Families who fall
  in the MIG I and MIG II category can avail of the
  Credit-Linked Subsidy Scheme (CLSS). CLSS for MIG
  I is available for either the construction or
  repurchase of a house with a carpet area of up to
  90 sq mts. For the MIG II category, the limit is
  up to 110 sq mts. This scheme is applicable to
  families where none of the members have a house
  that is in their name.
• Under CLSS, beneficiaries of the MIG I category
  are eligible for a 4 interest subsidy on a
  20-year loan of up to Rs 9 lakhs. MIG II
  beneficiaries can avail of a 3 interest subsidy
  on a 20-year loan of up to Rs 18 lakhs. Therefore
  for a loan of up to Rs 9 lakh, the interest
  subsidy works out to be Rs 2.44 lakhs whereas,
  for a loan up to Rs 12 lakhs, the interest
  subsidy works out to be Rs 2.48 lakhs per
  beneficiary. The total subsidy amount if
  applicable is paid upfront to the beneficiaries
  thus making home loans affordable for the first
  time homebuyer.

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Is your credit score important?

• The CLSS under the PMAY can, therefore, fulfill
  the home owing dreams of many a first time home
  borrower. But the question that careful borrowers
  are likely to ask is whether or not it is
  possible to avail of CLSS benefits and get a loan
  without CIBIL check. The good news for such
  borrowers is that the PMAY has been formulated
  considering the constraints of the aspiring home
  buyers in mind. Since such benefits are
  particularly targeted towards lower and
  middle-income groups, it is likely that a credit
  score will not play a very big role in the
  assessment of your creditworthiness.
• However, if you are still worried about a credit
  score, you are better off by applying through a
  non-traditional lender like a Non-Banking Finance
  Company (NBFC), a small finance bank or even
  regional rural banks and urban co-operative banks
  rather than large commercial banks. This is
  because non-traditional lenders and smaller banks
  have other tools of credit assessment and are
  likely to give minor attention to your CIBIL
  score. In fact, even if you are a first-time
  borrower, with no previous CIBIL record, it will
  be possible for you to get a loan without credit
  score check under PMAY. Availing of such a loan
  and making regular repayments on the same can, in
  fact, help you build a good credit record and
  make you more credit worthy in the future.

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Bottom line

• In the current scenario, more and more real
  estate developers are concentrating on affordable
  housing projects that fulfill the requirements of
  housing under PMAY. Further with the
  strengthening of the real estate sector with the
  introduction of GST (Goods Service Tax) and
  RERA (Real Estate Regulatory Authority), things
  are going in favor of the aspiring home owner.
  With the supportive CLSS benefits under PMAY,
  affordability is only expected to improve here
  on. Thus if you have been contemplating the
  purchase of your first property, but are worried
  about home loan interest rates, now is the time
  to check out your eligibility under PMAY. To
  explore best home loan schemes avail benefits
  of PMAY from different lenders, log on
  to www.afinoz.com or mail us at info_at_afinoz.com We
  are here to serve you the best financial
  products without any hassles.

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