The government has now chalked out the implementation of two new subsidy schemes under the Prime Minister Awas Yojana (PMAY). 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 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.
If you earn up to Rs 18 lakh per annum, buying your first house will cost about Rs 2.4 lakh less as the government will subsidise a part of your home loan interest. At present, this subsidy is available to only those earning up to Rs 6 lakh per annum.
People earning less than Rs 6 lakh per annum will get a grant 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 percent interest on Rs 6 lakh, and 9 percent 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 subsidy scheme will majorly benefit and encourage the first time home buyers and will bring pace in the sale of homes. Since the subsidy on interest rates are available to those earning up to 18 lakh a year, the scheme is deemed to benefit lower, middle and upper-middle income groups.