PMAY CLSS for MIG until March 2021

The government of India has extended the Credit Linked Subsidy Scheme (CLSS) for the Middle Income Group (MIG). This group includes the lowest strata of the middle class (MIG 1) and those slightly higher (MIG 2) under the Pradhan Mantri Awas Yojna (PMAY). Hence, now this is applicable for one more year i.e. until March 2021. Consequently, this would boost the demand for real estate and construction activity. The sole intention was to offer affordable housing to the middle-income group.

PMAY CLSS: What is it?

Credit Linked Subsidy Scheme (CLSS) is a scheme under the Pradhan Mantri Awas Yojana (PMAY) in which the Government of India offers interest grants to entitled customers who meet some set considerations. This is primarily for the economically weaker section (MIG). This section includes people with annual income between Rs. 6 Lakh – Rs. 18 Lakh.

Wondering if you are eligible for the MIG category? Looking to know who all within a family can apply? The other possible questions could be how much is the financial support in rupee terms and how does the subsidy impact the loan amount? Let’s be aware of who all are entitled.

Eligibility for PMAY housing loan subsidy for MIG

• The aim is to provide affordable housing for all. Consequently, it is clear that all those who already are the owner of a pucca home are debarred of the benefits of the PMAY scheme. Furthermore, if any of their family members possess a pucca home, they aren’t eligible too. Moreover, the annual income of the person shouldn’t be over18 lakhs.
• The applicant must not have availed any state/ central support under any housing scheme from Government of India yet
• One adult female membership is compulsory in the property rights
• A female member of the family should co-own the property
• Position of the property should fall under legislative towns as per 2011 census and their adjoining planning area (simplified by the government from time to time)

How is the subsidy adjusted?

Under this scheme the interest subsidy total will not be on the degree of difference of interest amount rather will be the net present value (NPV) of the interest financial assistance amount. As a matter of fact, you need to compute it a cut-rate of 9 percent. To calculate NPV of the financial support, one will need the loan’s amortisation schedule as the interest section of each EMI (Equated Monthly Instalment) has to be measured. You may use a simple excel sheet to get the NPV.

From where can you get subsidised loans?

You may take advantage of the PMAY linked loans from any primary lending institutions such as listed commercial banks, Urban Cooperative Banks, housing finance companies, State Cooperative Banks, Regional Rural Banks, Non-Banking Financial Company, Small Finance Banks, etc. Most importantly, under this scheme no processing charge is applicable for eligible housing loan amount as per income criteria. However, for additional loan amount i.e. something beyond the eligible loan amount; the lender can charge the normal processing fees.

I hope the blog helps you in understanding the scheme properly. Explore the affordable housing scheme cautiously before you take the leap to invest.