How much money you can save by buing a house under Pradhan Mantri Awas Yojana?

1 year ago sarkariadmin 7

It has been 2 years of Pradhan Mantri awas yojana has been launched . Also with time several changes have been made under the scheme. And it been know that interest is picking up under this affordable housing scheme. All developer who are into lead under this scheme has started their offerings at best for those people which are interested in government subsidy. It may sound tempting for these people. But, do you have any guessing or ideas how much money you are saving under this yojana or how much money you have to pay to get your own house under this scheme.

pradhan-mantri-awas-yojana

How much money you are saving under PMAY

Along with this Pradhan Mantri awas yojana can only generate a positive response only when all those builders who are under this scheme deliver their project in time with all promised they made to the home buyers. Infrastructure of houses is again a new agenda that government needs to tell people.

credit link subsidy scheme
Credit link subsidy scheme has been provided is also a real term as in rupee . This CLSS scheme mainly aims at (EWS – economically weaker section ) and (LIG – Lower Incomme Group) as defined in CLSS guidelines. Every applicant who earns upto RS 3 Lakh to RS 6 Lakh per annum lies in this category. Two new subsidy slabs (also yet to come) will bring in earning up to Rs 12 lakh and Rs 18 lakh per annul into the fold. Subsidy is fixed for each category of income irrespective of loan amount.

Benefit of Government subsidy in Percentage

home-loan-pmay-news

As from the news above government has approved a credit linked subsidy up-to home loan for fifteen years. This credit link subsidy approved will be valid only for home loans up-to amount of Rs 6 Lakhs.

Two new slabs has also been under this subsidy scheme. Under these two new slabs subsidy rate has been divided as.

  1. People who are having an annual income of Rs 12 lakh will get 4% interest subsidy for a loan amount of Rs 9 Lakhs.
  2. And people who are having an annual income of Rs 18 lakhs will get  only 3% interest subsidy for a loan amount of Rs 6 lakhs.

If candidates take loan beyond subsidized rate than interest will be on non subsidized rates.

Governments-Subsidy-Scheme- updates

Amount  under Government subsidy 

Government subsidy amount is a tricky thing to understand , Think like this interest subsidy amount will be the net  present value (npv) of Interest subsidy amount. Calculate it as a discount rate of 9 percent.

How to calculate NPV of subsidy

To calculate NPV of the subsidy, one will need the loan’s amortization schedule as the interest portion of each equated monthly installment (EMI) has to be considered. Thereafter, use the Fx function in an excel sheet to arrive at the NPV.

How graph goes 

Because of the subsidy amount, your loan amount reduces and, therefore, the interest burden too comes down.

Let us now see how the interest subsidy amount will be calculated and how it will be applied to one’s loan.

I. First, let’s consider someone with an income up to Rs 6 lakh
subcidy scheme for 6 lakhs.jpg
(Maximum subsidised loan of Rs 6 lakh; Subsidy: 6.5 per cent)
Original loan amount: Rs 6 lakh
Interest rate: 9 per cent
EMI: Rs 5,398
Total interest cost (over 20 years): Rs 6.95 lakhAt 6.5 per cent (subsidy), the NPV of the interest subsidy amount comes to Rs 2,67,000.This interest subsidy amount is what the government is offering to the borrowers.

So instead of the Rs 6 lakh loan, the revised loan amount comes to Rs 3,33,000.

Remember, the borrower has still to service the loan at 9 per cent per annum. This is because the interest subsidy amount will be credited upfront to the borrowers. The net effect: Reduced EMI and a lesser interest burden.

Revised loan amount: Rs 3.33 lakh
Interest rate: 9 per cent
EMI: Rs 2,996
Total interest cost (over 20 years): Rs 3.86 lakh

Net reduction in EMI: Rs 2,402
Net savings in interest: Rs 3, 08,939

II. Next, let’s consider someone with an income up to Rs 12 lakh
subsidy scheme for 9 lakhs.jpg
(Maximum subsidised loan of Rs 9 lakh; Subsidy: 4 per cent)
Original loan amount: Rs 9 lakh
Interest rate: 9 percent
EMI: Rs 8,098
Total interest cost (over 20 years): Rs 10.43 lakhAt 4 per cent (subsidy), the NPV of the interest subsidy amount comes to Rs 2, 35,000.
Revised loan amount: Rs 6.65 lakh
Interest rate: 9 per cent
EMI: Rs 5,983
Total interest cost (over 20 years): Rs 7.70 lakhNet reduction in EMI: Rs 2,114
Net savings in interest: Rs 2, 72,445

III. Next, let’s consider someone with an income up to Rs 18 lakh
subsidy scheme for 12 lakh
(Maximum subsidised loan of Rs 12 lakh; Subsidy: 3 per cent)
Original loan amount: Rs 12 lakh
Interest rate: 9 per cent
EMI: Rs 10,796
Total interest cost (over 20 years): Rs 13.91 lakhAt 3 per cent (subsidy), the NPV of the interest subsidy amount comes to Rs 2,30,000.
Revised loan amount: Rs 9.7 lakh
Interest rate: 9 per cent
EMI: Rs 8,727
Total interest cost (over 20 years): Rs 11.24 lakhNet reduction in EMI: Rs 2,069
Net savings in interest: Rs 2, 66,649

Conclusion of saving under Pradhan Mantri Awas Yojana
The actual interest rate may be different from the 9 per cent considered above.
Currently, marginal cost of funds based lending rate (MCLR)-linked home loan rate is hovering around 8.5 per cent, so the EMI will be lower and even the interest savings will be more. Check terms & conditions for pmay