The government has reportedly worked out the details of the two new subsidy schemes under the Prime Minister Awas Yojana (PMAY), as announced by Prime Minister Narendra Modi on December 31, 2016. The government’s two new subsidy slabs aim at fueling the real estate sector and achieving housing for all by 2022. As against the current limit of 15 years, these schemes will apply to loans with a tenure of 20 years, The Times of India reports. The subsidies, until now available only to those earning up to Rs 6 lakhs per annum, will henceforth apply to homebuyers based on the income bracket they fall under. These PMAY subsidies will be in addition to the income tax benefits on home loans.
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People earning less than Rs 6 lakh per annum will get a subsidy of 6.5 percentage points on a principal component of Rs 6 lakh, regardless of their total loan amount. If they borrowed money at nine per cent interest, they will pay only 2.5 per cent interest on Rs 6 lakh, and nine per cent on the remainder. In the second bracket, those earning up to Rs 12 lakh per annum will receive an interest subsidy of four percentage points on a principal component of Rs 9 lakh. Under the highest interest category of Rs 18 lakh per annum, home-buyers can avail a subsidy of three percentage points on a principal component of Rs 12 lakh, meaning your first house will cost about Rs 2.4 lakh less if you earn Rs 18 lakh a year.
The net benefit to all three categories is around Rs 2.4 lakh (assuming an interest rate of 9 per cent), while monthly installments will reduce by approximately Rs 2,200, Times of India reports.
National Housing Bank (NHB) and the Housing and Urban Development Corporation (HUDCO) are the nodal agencies to implement the schemes. The government has subsidised nearly 18,000 first time home-buyers of the low-income group at a cost of almost Rs 310 crore. A senior NHB official expects the disbursal rate to increase as the middle-income category has now been roped in.