How to Reduce Home Loan EMI Under Pradhan Mantri Awas Yojana (PMAY)?

April 27, 2021

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Launched in the year 2015, the Pradhan Mantri Awas Yojana (PMAY) is an initiative by the Indian Government that aims at providing affordable houses to citizens belonging to different economic sections.

An estimate of 20 million houses will be constructed under this revolutionary ‘Housing for All’ initiative. Moreover, to further encourage the citizens to purchase a property under the PMAY scheme, the Government has introduced the Credit Linked Subsidy Scheme (CLSS).

Home loan borrowers belonging to the Economical Weaker Section (EWS), Lower Income Group (LIG), and Middle Income Group (MIG) can avail a subsidy on the interest rate with the help of CLSS. This can help in reducing the home loan EMI, thereby making repayment of the home loan slightly easier.

The table below reflects how Credit-Linked Subsidy Scheme (CLSS) benefits the homebuyers from EWS, LIG, and MIG categories:

Category	EWS	LIG	MIG-1	MIG-2
Annual income	Rs 3 Lakhs	Between Rs 3 Lakhs and Rs 6 Lakhs	Between Rs 6 Lakhs and Rs 12 Lakhs	Between Rs 12 Lakhs and Rs 18 Lakhs
Interest rate subsidy	6.50%	6.50%	4%	3%
Maximum loan amount	Rs 6 Lakhs	Rs 6 Lakhs	Rs 9 Lakhs	Rs 12 Lakhs
The maximum tenure of the loan	20 years	20 years	20 years	20 years
The maximum interest subsidy amount	Rs 2,67,280	Rs 2,67,280	Rs 2,35,068	Rs 2,30,156

Learn how the Credit Linked Subsidy Scheme or CLSS under the PMAY (Pradhan Mantri Awas Yojana) has profited numerous beneficiaries with reduced EMIs.

How Does PMAY Help in Reducing Home Loan EMI?

As mentioned earlier, the eligible beneficiaries of PMAY can avail of a subsidy on the home loan interest rate. This leads to the reduction of home loan EMIs for qualified borrowers on the acquisition of their first home. Also, since the National Housing Bank will pay the entire subsidy to the lender at one go, the EMI burden reduces further.

As per a statement by Mr. Sriram Kalayanaraman, the CEO of the National Housing Bank, the interest rate subsidy of 4% would reduce the EMI by Rs 2062 for a housing loan of Rs 9 lakhs. Likewise, at a 3% subsidy, the EMI of Rs 12 lakhs loan will reduce by Rs 2019 (Assuming the loan tenure to be 20 years and the normal housing loan interest rate to be 8.65 percent).

However, the borrower can either opt for reduced EMIs or pay off the loan quickly with the current EMI. This interest rate subsidy under CLSS is applicable for housing loans for new construction or the expansion of an already existing property.

If you are a first-time homebuyer, you can make the most of the PMAY scheme to avail of a subsidy on home loan interest rate, provided you satisfy the eligibility criteria for the same.

Eligibility Criteria for Availing Subsidy Under PMAY:

The PMAY applicant should be less than 70 years of age.
All home loans in India that are sanctioned or in the approval process after January 1, 2017, are eligible for the interest subsidy.
Applicants should not have a house registered under their name or the name of any family members.
Any family member of the applicant shouldn’t have availed central assistance from the Indian Government under any housing scheme.
For married applicants, either of the spouses or both together (in joint ownership) are eligible for a single subsidy.

By now, you must have figured that the Pradhan Mantri Awas Yojana (PMAY) is an excellent scheme for first-time homebuyers looking to purchase affordable homes. So why wait? Check your PMAY eligibility, apply for a home loan and purchase your first house at a reasonable price, today.