Affordable Housing Loans: Government Schemes You Should Know About
For every Indian family, owning a home is more than a financial accomplishment. Over the past decade, rapid urbanization has evolved dramatically. The aspiration to own a home, however, is still reliant upon one factor: the availability of affordable housing financing. This is where government housing programs and loans for affordable housing have transformed the financial ecosystem by bridging the gap between affordability and aspiration. Institutions like Shubham Housing Finance, one of the top most home NBFCs, have played a vital role in reaching families.
In this article, we will examine the key government schemes you should know about. One of the most important pillars supporting this goal is the availability of affordable housing loans. Backed by government housing schemes and executed by both banks and NBFCs, these financial products are helping people move from renting to owning often for the first time in their lives.
PMAY (Pradhan Mantri Awas Yojna)
PMAY (Pradhan Mantri Awas Yojna) , being implemented by the Ministry of Housing and Urban Affairs (MoHUA), was launched on 25th June 2015. The mission offers Central Assistance to the implementing agencies through States/Union Territories (UTs) and Central Nodal Agencies (CNAs) for providing homes to all eligible families/ beneficiaries in response to the established demand for housing which is about 1.12cr.
This initiative aims to provide homeownership accessible to every citizen, particularly those in the Economically Weaker Section (EWS), Lower Income Group (LIG), and Middle Income Group (MIG) categories.
Pradhan Mantri Awas Yojana (Urban)
The primary objective of PMAY-U is to provide all eligible families and beneficiaries who do not have a pucca house in cities and towns. All houses under PMAY-U will have basic facilities including a kitchen, power, toilet, and water supply. This scheme encourages women empowerment by granting land or a home in the female member's name or in joint names. Slum residents and other members of the Low Income Group (LIG), Middle Income Group (MIG), and Economically Weaker Sections (EWS) in urban areas are given preference under this system. The Finance Minister announced in the union budget 2024 that the housing requirements of one crore eligible urban families would be met within the next five years under PMAY-U 2.0.
Pradhan Mantri Awas Yojana Gramin (PMAY-G)
The key objective of PMAY-G is to provide pucca houses to all the rural families that are either homeless or residing in kutcha houses. With the objective to provide basic necessities to homes, including power, drinking water, clean and efficient cooking fuel, toilets, and the treatment of solid and liquid waste, this program works in partnership with other government programs.
Under this scheme, the central and state government will divide the expenditure of unit aid under this plan in the following ratios: 60:40 for plain areas and 90:10 for North Eastern states, Himachal Pradesh, Uttarakhand and Jammu and Kashmir.
The implementation of PMAY-G for the development of an extra 2 crore homes from FY 2024–2025 to FY 2028–2029 was approved by the Union Cabinet. By March 2029, 4.95 crore eligible rural families would receive basic necessities from the Ministry of Rural Development.
Benefits Of PMAY Yojana
1. Under PMAY-G beneficiaries will get a home of at least 25 square meters. On the other hand, PMAY-U beneficiaries will get a home that ranges in size from 30 to 90 square meters depending on where they live. Also, under the PMAY-G the Swachh Bharat Mission (G) would contribute Rs.12,000 to the beneficiaries to help build a toilet.
2. PMAY-U ensures each household will be given Rs.1.5 lakh as central assistance. The government would provide government land to landless people or any other type of public land so they can build homes under the scheme of PMAY.
3. In order to strengthen women empowerment the houses and the land will be assigned in the names of the female household members or jointly in the names of the husband and wife. Beneficiaries of PMAY will get interest subsidies from Primary Lending Institutions (PLIs) on housing loans for the purchase or new construction of houses.
4. The socio-economic condition of homeless families will be improved by homes given to them. A home equipped with better health, education, and general well-being will be achieved by this scheme.
5. The PMAY-U scheme will help in reducing the slums in our nation by giving slum residents pucca houses. The beneficiaries will acquire their financial assistance through an electronic transfer to their Aadhaar-linked bank or post office accounts. With this appropriate method the possibility of frauds will be reduced.
CLSS (Credit Linked Subsidy Scheme)
The key consideration factor for home loans under PMAY is CLSS. The government approach in order to improve institutional credit flow to the housing needs of urban poor will implement credit linked subsidy component as a demand side intervention.
Through primary lending, the interest subsidy will be credited up front to the beneficiaries' loan accounts, lowering their effective housing loan and Equated Monthly Instalment (EMI). The interest subsidy's Net Present Value (NPV) will be computed using a 9% discount rate.
EWS (Economically weaker section) LIG (Low Income Group) Home Loan
Economically Weaker Section (EWS) and Low Income Group (LIG) beneficiaries who apply for housing loans from banks, housing finance companies, and other similar organizations are eligible for an interest subsidy at a rate of 6.5% for a period of 20* years or for the duration of the loan, whichever is shorter.
Only loans up to Rs.6 lakhs will qualify for the credit-linked subsidy; any loans over this amount will be charged at a nonsubsidized rate. Housing loans taken out for new construction and the addition of rooms, kitchens, toilets, etc. to existing homes as incremental housing would be eligible for credit-linked subsidies. Up to 30 square feet should be the carpet area of homes built under this mission component.
Sources I have used:
https://cleartax.in/s/pradhan-mantri-awas-yojana?utm_source=chatgpt.com
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