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You Can Still Get Benefit Under PMAY Even If Your Parents Own a Home

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PMAY Benefits- You can still get benefits even if your parents own a home.

Here we break down important details like who all can apply, how much the subsidy in rupee terms is and how the subsidy impacts the loan amount.

If you are looking to own a home of your own, under the Pradhan Mantri Awas Yojana (PMAY) scheme, there are only nine months left for you to arrange the amount for down payment, decide the location, builder and the home loan lender.

The recently introduced Credit Linked Subsidy Scheme (CLSS) for Middle Income Group (MIG) to be called CLSS for MIG will be for a period of one year starting 1.01.2017.

Let’s see who all are eligible for the MIG category, who all within a family can apply, how much is the subsidy in rupee terms and how does the subsidy impact the loan amount.

The middle-income earners
The new category MIG, introduced recently, will further comprise of two slabs. The Middle Income Group (MIG) – I will comprise of households having an annual income between Rs.6,00,001 up to Rs.12,00,000.

And, the Middle Income Group (MIG) – II will comprise of households having an annual income between Rs.12, 00,001 up to Rs.18, 00,000. So, effectively anyone earning between Rs 6 lakh and Rs 18 lakh per annum can avail the benefits of subsidized loans provided other conditions are met.
You Can Still Get Benefit Under PMAY Even If Your Parents Own a Home

Who are all eligible?
The scheme is primarily aimed at providing housing for all. Therefore, understandably, all those who already own a home or any of their family member own a home, are kept out of the benefits of PMAY.

The rule says, “The beneficiary family should not own a pucca house and the beneficiary family should not have availed of central assistance under any housing scheme from Government of India.” A beneficiary family will comprise of husband, wife, unmarried sons and/or unmarried daughters. To avoid duplication, beneficiary family members have to provide their Aadhaar numbers while applying for the loan.

But, as per the guidelines, “An adult earning member (irrespective of marital status) can be treated as a separate household, provided that he/she does not own a pucca (an all weather dwelling unit) house in his / her name in any part of India.”

So, even if children (married or unmarried) are staying with their parents in a house owned by the parents (or on rent, in the same or another city), they can opt for PMAY provided they are earning and don’t own any other home.

For a married couple living on rent and even if their parents own a home, will anyhow is treated as a separate household. However, if they wish to avail PMAY benefits, they will be eligible for a single house, bought by either of the spouses or both together in joint ownership.

Subsidy
In the MIG – I category, individuals will get 4 per cent interest subsidy on a loan amount up to Rs 9 lakh, and in the MIG – II slab category individuals will get a 3 percent subsidy on a loan amount up to Rs 12 lakh. If one needs an additional loan, the lender will prove it but the additional loans beyond the subsidised loan amount will be at a non-subsidised rate.

You can still get benefit under PMAY even if your parents own a home

How does it work
Say, someone in the MIG II category, wishes to buy a house costing Rs 60 lakh. After the mandatory minimum down payment of 20 percent i.e. Rs 12 lakh, the balance of Rs 48 lakh can be arranged through a loan. But under PMAY, a subsidy of 3 percent would be applicable till Rs 12 lakh, hence, the lender’s home loan interest rate will be applicable on the balance of Rs 36 lakh.

You can still get benefit under PMAY even if your parents own a home

How is the subsidy adjusted
The interest subsidy amount will not be the differential of interest amount (of actual and subsided rate) but will be the net present value (NPV) of the interest subsidy amount. It is to be calculated at a discount rate of 9 percent. For calculating NPV of the subsidy, one will need the loan’s amortisation 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. Because of the subsidy amount, your loan amount reduces and, therefore, the interest burden to come down.

Suppose on a home loan of Rs 12 lakh, the NPV of the 3% interest subsidy comes to Rs 2.30 lakh. So, out of the loan amount of Rs 12 lakh, the amount of Rs 2.30 lakh will get deducted and the borrowers has to pay EMI on the balance i.e. Rs 9.7 lakh at a rate at which the lender is providing loans, which could be 8.75 or 9 percent or whatever the MCLR based home loan rate is the bank.

The interest subsidy will be credited upfront to the loan account of beneficiaries resulting in reduced effective housing loan (deducting it from the principal loan amount) and Equated Monthly Installment (EMI). The borrower will pay EMI as per agreed document rates on the remainder of the principal loan amount.

Loans under PMAY
The PMAY benefits can be availed if one wishes to acquire a new house from the developer or the builder and even for buying a house from the secondary market through repurchase. One may also take a loan for the construction of the house.

Interestingly, if someone already owning a home wants to avail PMAY benefit, there’s still a possibility. The government has clarified that the Mission (Housing for All by 2022) also provides for enhancements/incremental housing to the existing ‘pucca’ house under the CLSS component. So, a home loan provider cannot decline or not entertain an applicant seeking a home loan for the addition of a room, kitchen etc to the existing dwellings solely on the ground that the applicant is already possessing a pucca house.

Home area
Under PMAY, the area of the house is different for all categories but it’s the carpet area that is to be looked at. For MIG I, the carpet area is to be 90 sq mt (968.752 sq ft) and 110 sq mt (1184.03 sq ft) for MIG II category. Carpet area is the area enclosed within the walls i.e. actual area to lay the carpet. This area does not include the thickness of the inner walls. If you add up outer walls, balcony and other common areas, it’s the built-up area.

Further, when space for lobbies, stairs, elevators etc is added, the super built-up area is arrived at. Builders as of today are charging buyers on the super built-up area, a practice which the RERA is going to remove by making the buyer pay only on the basis of carpet area.

A 110 sq mt (1184.03 sq ft.) carpet area is close to 1480 sq ft of the built-up area as nearly 25 percent or even higher, is the difference between them. A 2 BHK could look feasible in several locations. This new move has made affordable housing scheme accessible to many people living in urban areas now.

Subsidised loans from where
One can avail PMAY linked loans from any primary lending institutions such as scheduled commercial banks, housing finance companies, Regional Rural Banks s, State Cooperative Banks, Urban Cooperative Banks, Small Finance Banks, Non Banking Financial Company etc. There will not be any processing charge for eligible housing loan amount as per income criteria under the Scheme. For additional loan amounts beyond the eligible loan amounts for interest subsidy lenders can charge the normal processing fee.

The impact
PMAY scheme for MIG buyers may not push up the demand for residential housing much. The benefit of Rs 2.3 lakh/Rs 2.35 lakh may not appeal much considering the cost of houses in the urban areas. The government may consider doing away with the area restriction of 90/110 sq mt to pep up the demand.

Conclusion
Affordable housing has been given infrastructure status in Budget 2017, which should aid developers in takings its associated benefits. But for a common man, the timely delivery of the house still remains a distant dream. For availing the benefits, the builders had to complete the affordable housing projects in 3 years but now (Budget 2017) have to complete in 5 years. Tread carefully and evaluate all the options before venturing out to explore the affordable housing segment, even if you are a first-time home buyer.

Source: ET Realty

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NTR Housing Scheme In Full Swing: Chief Minister N. Chandrababu Naidu

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NTR Housing Scheme In Full Swing: Chief Minister N. Chandrababu Naidu

On Thursday, Andhra Pradesh Chief Minister N. Chandrababu Naidu said with the estimated expense of Rs. 5,556.74 crore, the construction of more than 2,44,164 houses, out of the proposed 3,03,044, has been commenced under the NTR Housing Scheme 2017.

While addressing the second day of the Collectors’ Conference he also said the construction of the remaining houses will begin soon. He mentioned that Prakasam and the Kurnool districts are ahead of the schedule in the urban housing scheme. Also, the works are in full swing in the Nellore and the Guntur districts under the rural housing scheme.

According to Naidu, the government will complete 2.5 lakh houses by January next year and another lot of two lakh houses by June.

By October 2, 2018, the state government intends to finish the construction of all the houses and plans to celebrate with massive house warming ceremony with local public representatives. This will help them set an example for housing schemes in other states.

Also Read: Raunak Group Presents Apna Pehla Ghar Campaign

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A Mumbai Suburbs’ Swift Transformation From Industrial To A Residential Zone: Wadala

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A Mumbai Suburbs’ swift transformation from industrial to a residential zone: Wadala

An industrial zone primarily, Wadala has undergone a drastic transformation in the past decade. Now an upcoming residential area, this Mumbai suburb is one of the seven islands to form the modern Mumbai. It is located on the Harbour line of Mumbai’s railway network.

Due to its proximity to BKC, large scale land development was inevitable, thus fueling the real estate market. Wadala is bordered by Dadar on the West, Matunga on the Northwest and Sewri on the South. Nestled between south Mumbai and the suburbs, Wadala enjoys strong connectivity by road and rail to most parts of Mumbai.

It has a number of flyovers like the Anik Panjrapol Link Road, Elevated road and Santacruz flyover. Thane, CST and Chembur are connected via the Eastern Highway while the Western Highway connects the locality to Bandra and Borivali. Wadala has the biggest bus depot in Mumbai. Furthermore, the multiple infrastructure initiatives like the monorail, Truck Terminal and the expansion of Highway are in various stages of development.

All this has given rise to residential demand and pushed the property value over the last few years. One of the most populated areas in Mumbai, Wadala has a large number of old temples, churches and dargahs, university campuses, schools, reputed hospitals and is also home to a former world’s largest IMAX dome theater. There are many stores, showrooms and malls around Wadala like the R Mall, High Street Phoenix and Palladium Mall.

Ramesh Nair, COO – business and international director, JLL India says, “A decade ago, property prices at Wadala were as low as Rs 2,800 per sq. ft. and it rose to Rs 14,000 a few years ago.”  As the infrastructure plans are on their way, so are the renowned developers like Ajmera, Dosti Group and Lodha Group among others.

Wadala at present offers one of the highest returns on real estate investments in the region. All the above-mentioned developers have their luxury projects in the area.

Ajmera I-Land introduces Aeon, Zeon and Treon towers with 2, 3 and 4 BHK plush homes. Conceptualized by renowned Singapore based Architects Space Matrix, these spaces with top-of-the-line lifestyle amenities exude exemplary class and finesse. The first residential floor begins at 110 feet from the ground level and offers several modern lifestyle amenities like kid’s pool, swimming pool, gymnasium, club house, open space and landscaped gardens, yoga room, kid’s play area and senior citizen corner.

Dosti Ambrosia is a 36-storey tower nestled in the 18 Acre Township of Dosti Acres. The architecture of the project was undertaken by renowned Hafeez Contractor in the 2 and 3 BHK apartments. It offers an exclusive rooftop swimming pool with 40,000 sq. ft. of landscaped gardens. You will find all modern conveniences like Gymnasium, Tennis Court, Indoor Badminton Court, Yoga and Meditation Room, Elderly Corner, Banquet Hall, Indoor Games, Indoor Badminton Court, Guest Rooms, Restaurant, Grand Entrance Lobby, Kids Play Area, 2 Club Houses and an Amphitheatre.

New Cuffe Parade by Lodha Group offers its residents all the comforts of a world-class lifestyle. The 2 and 3 BHK homes are spread in over 23 acres of land with 15 acres of stunning landscape and 75,000 sq. ft. of the club house. It includes 11 swimming pools, an organic farm, cricket pitch and multiple themed gardens. The buildings are designed by the world renowned WOHA in Singapore and the landscape was planned by Sitetectonix in Singapore.

Also Read: Mumbai to get Building Taller than Burj Khalifa, Road Bigger than Marine Drive

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Rajasthan Government May Hike The Affordable Housing Prices

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Rajasthan Government May Hike The Affordable Housing Prices

The prices of homes under the ambitious Mukhyamantri Jan Awas Yojana are expected to be increased by the state government.

According to the sources in the empowered committee meeting to be held on Monday, a proposal to increase the cost of a low-income group (LIG) and economic weaker section (EWS) houses will be proposed. Urban development and housing (UDH) minister Srichand Kriplani will chair the meeting. The LIG and EWS houses, presently are being constructed on government lands by private builders. These homes are sold at a fixed rate of Rs 1,250 per sq feet; out of which 1000 rupees per sq ft is given by Urban Improvement Trust (UIT), development authorities and local bodies to the builders.

According to provision 4(A) and 4(B), the developers are supposed to build EWS and LIG houses on government land. Seventy-five percent of such government land can be used in building EWS and LIG houses, while the remaining 25% can be sold by the developers. However, since the rates provided by the government are less the developers are not showing interest to construct houses under these categories. Sources said, “In Jaipur, not a single developer has shown interest in constructing houses under this model. The JDA has invited expression of interest (EOI) several times.”

The UDH is leaving no stone unturned to attract the builders in order to achieve the target of constructing 10 lakh houses by 2019. The sources mentioned, “As per the new proposal, the department has proposed to provide Rs 1,600 per sq feet rate to the developers. The land rates have increased subsequently over the period of time; this is why increasing rates has become a need of the hour.”

Sources further added, “The developers are constructing G+3 buildings at present. However, it is not cost-effective. It has been proposed to construct G+2 buildings for LIG and EWS category.”

Also Read: The Impact Of Regulations On The Real Estate Market

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