How Can PMAY CLSS Help Buy Your Dream Home?

Earning above ₹50,000 a month and checking out a home to buy? Well, you've got the quite exciting option of Pradhan Mantri Awas Yojana (PMAY), launched by the govt to deal with everyone by 2022, to avail. The flagship housing program has now got the string of Credit Linked Interest Subsidy (CLSS), which makes it a beautiful proposition for the potential home buyers. What subsidy does well is lower the interest cost related to a home equity credit.

CLSS, currently, has two segments - MIG-I and MIG-II. the opposite two EWS and LIG, which were also the part of CLSS earlier, not exist. The MIG-I and II are getting to be applicable till March 2019, extended from the previous deadline of December 2017. Let’s just explore the advantages of PMAY CLSS within the article.

How Much Subsidy Available Under PMAY CLSS?

Middle Income Group -I (MIG-I) lists those borrowers having an annual income of above ₹6 lakhs-12 lakhs, while MIG-II includes people earning above ₹12 lakhs-18 lakhs a year. While MIG-I is entitled to a forty-five interest subsidy on a loan amount of ₹9 lakhs, the MIG-II enables a borrower to avail 3% subsidy on a loan portion of ₹12 lakhs. The unsubsidized portion of the loan in each of the 2 cases will bear a traditional rate of interest.

Hearing this, tons many can say that interest subsidy is going to be calculated from the differential of interest amount under subsidized and normal rates. But that’s not how it’s calculated. It’s calculated by internet present value (NPV) of the interest subsidy amount. The NPV calculation is to be made at a reduced rate of 9%. The interest subsidy so calculated is first deducted from the first loan amount before the traditional rates apply to a balanced amount of the loan.

Mathematics of PMAY CLSS

To understand mathematics better, you want to take a glance at the instance below.

Example - You earn ₹58,000 per month then fall into the MIG-I category. you're getting to avail a 20-year home equity credit of ₹45 lakhs, have a traditional rate of interest of 8.45% once a year. Without CLSS, you're likely to pay an EMI of ₹38,910, which may culminate into an interest outgo of the maximum amount as ₹48,38,342. the entire payout would thus be ₹93,38,342.

In this case, the subsidy amount is calculated to be ₹2,35,000. Now, this amount will get subtracted from the first loan of ₹45 lakhs to reach ₹42,65,000, on which the traditional rate of interest will apply. The EMI and interest outgo after subsidy would thus be ₹36,878 and ₹45,85,673, respectively. the entire repayment is probably going to be ₹88,50,673, decreasing the general liabilities by ₹4,87,669.

Someone falling under the MIG-II would receive a subsidy of ₹2,30,000. The remaining process of EMI and other calculations remains an equivalent.

No Processing Fee - Another Temptation That’s Hard to Resist

What’s more, is that home loans are often disbursed with none processing fee under the PMAY scheme. So, a fee of 10,000-20,000 which remains the case with normal home loans won’t apply here, leading to enhanced savings.

Where to use for PMAY CLSS Home Loans?

Most public sector banks including depository financial institution of India (SBI), premiere private lenders, housing finance firms, and a couple of others have joined hands with National Housing Bank (NHB) to form sure the subsidy reaches to the PMAY CLSS home equity credit applicants.

CLSS Scheme Eligibility

You must also know the factors which will cause you to eligible for the scheme. First and foremost, there shouldn’t be any home under your/spouse/father/mother’s name anywhere in India. The home, which you would like to shop for or construct, must have a carpet area of 120 square meters, as you're in MIG-I category. For those within the MIG-II category, the carpet area requirement is 150 square meters.

The article has thus done its job of enlightening on subsidy, its calculation, the eligibility one must need to avail it, and other critical information. So, don’t await the last date of the CLSS scheme to arrive, avail it now to shop for your dream home and save on the interest repayments.