If your annual income is up to Rs 18 lakh, you can now avail of Rs 2.3 lakh up front interest subsidy even for buying a 2,100 sq feet flat or house with three or four bedrooms. The housing and urban affairs ministry on Tuesday increased the carpet area of houses eligible for interest benefit under the PM Awas Yojna (PMAY) for the middle-income group (MIG) by 33%. While such a large apartment may not be within reach of someone earning Rs 18 lakh in Delhi or Mumbai, the decision is aimed at expanding the beneficiaries in tier three and four cities and small municipal and development areas, where housing cost is much lower.
The interest subsidy under PMAY is available for three categories of first-time home buyers. The government had widened the beneficiaries net by including two sub-categories of MIG to get the interest subsidy in December 2016 based on their annual income.
Households with annual income of Rs 6 lakh to Rs 12 lakh have been put under MIG-I category, while those earning Rs 12 lakh to Rs 18 lakh fall under MIG-II segment. The government provides 4% interest subsidy for Rs 9 lakh in the case of MIG home buyers and 3% interest subsidy for Rs 12 lakh in the case of MIG-II home buyers.
So far, houses with carpet area up to 120 sq metres for MIG-I and up to 150 sq metres for MIG-II were eligible for interest subsidy. Now, these have been increased up to 160 sq metres (1,722 sq ft) and 200 sq metres (2,153 sq ft) for these two categories. Housing and urban affairs minister Hardeep Puri’s decision comes after his ministry received representations from builders and home buyers from smaller towns that they were not eligible to get the interest benefit since the plot or the flat size were more than the earlier prescribed norms. This is the second time when the government has revised the carpet area for MIG to avail interest subsidy. Since January 2017 when the scheme was rolled out, over 1.68 lakh MIG beneficiaries have got the interest subsidy of approximately Rs 737 crore. The ministry said the decision is in sync with the RBI policy to revise the housing loan limits for priority sector lending (PSL) eligibility. The federal bank has decided to revise the housing loan limits for PSL eligibility from existing Rs 28 lakh to Rs 35 lakh in metropolitan centres and from Rs 20 lakh to Rs 25 lakh in other centres provided the overall cost of the dwelling unit in the metropolitan and at other centres does not exceed Rs 45 lakh and Rs 30 lakh.