Affordable Home To All Gets Easier With Reduced Interest Rates

Prime Minister Narendra Modi has made the dream of Affordable Housing in India with his ‘Pradhan Mantri Awas Yojana’. While the earlier scheme announced in 2015 catered to LIG and EWS category, the prime minister has now added a new scheme for home buyers in metros and cities. For the people living in cities, further rebates on interest will be given under the MIG category. The new scheme was announced by the honourable PM on New Year’s Eve. The new slabs announced is expected to refuel the real estate sector in cities in the periphery of metros and big cities in India and achieve housing for all by 2022. 

PM Narendra Modi had announced his ambitious ‘Affordable housing for all by 2022’ scheme called ‘Pradhan Mantri Awas Yojana’ in 2015 with the aim of providing Affordable Homes in India for the poor. The scheme benefits the urban and rural poor people in fulfilling their dream of owning Affordable Property in India. 

Under the scheme, over 2 crore houses will be built for the economically weaker sections and low income groups of the society. The government has proposed a spending of Rs 2 Trillion for the project. Under the scheme, the Indian government will also provide an interest subsidy of 6.5% on housing loans for a period of 15 years. Under the scheme, Affordable Housing in India will be provided to females, people belonging to EWS category, LIG and first time home buyers. 

The prime minister has now announced a new scheme on the New Year that will provide further rebate on the interest rate for first time home buyers. The early scheme was meant for LIG and EWS category, while the new scheme also includes MIG applicants. The latest addition to the scheme will make it easier for home buyers in metros and cities with an income of up to Rs 18 lakhs to avail a home loan and make the dream of owning an Affordable House in India a reality.
 
Under the new scheme for a home loan amount of Rs 9 Lakhs, a 4% subsidy will be given and for people seeking a loan amount of Rs 12 Lakhs, 3% subsidy will be given. In rural areas a 3% subvention on loan amount of 2% can also be availed for home expansion and renovation. The loan term has also been increased from 15 years to 20 years under the new scheme. 

The interest rates on home loans currently stands at 9% and a subsidy of 4% on loans up to 9 lakhs, brings down the effective home loan interest rate to just 5% for buyers, which means substantial savings. The buyers will also be able to avail additional income tax savings on home loan as well. 

The initiative is expected to give a strong boost to the real estate market in India, especially in the periphery of all eight metro cities in the country. Localities like Noida Extension, Daruhera, Nimrana, and Bhiwadi in the Delhi NCR region are expected to see an increase in demand for affordable housing. The new scheme is also expected to kick start the real estate market in on the outskirts of Mumbai, Bangalore, Ahmadabad, Pune, Hyderabad, and Chennai.  
 
People eligible for the loan:

•    Home buyers who belong to EWS category, LIG, women or first time buyers can participate in the scheme. 
•    None of the family members including spouse, children should have taken a home loan. 
•    For EWS and LIG schemes the income of the applicant should be under INR 3 lakhs and INR 6 Lakhs, respectively.
•    For MIG category income should be below Rs 18 Lakhs.
•    The applicant’s age should be between 21 years to 55 years. 

The new addition to the Pradhan Mantri Awas Yojana announced earlier this year is significant for home buyers living in metros and cities, where the cost of buying a house is very high. The new scheme will allow home buyers to get a loan of a higher amount as well as get a rebate on interest. Under the new scheme, the monthly EMI for buyers will be reduced by nearly 40%. Applicants will have to pay an EMI of just Rs 7100 which is less than the monthly rent that people pay in cities. The scheme will help people living in the periphery of big cities like Mumbai and Delhi to buy their dream home at an affordable price!