Everything you need to know about the Pradhan Mantri Awas Yojana

In his much-awaited address to the nation on the eve of the New Year, the Prime Minister of our country announced the Pradhan Mantri Awas Yojana for the middle-income groups. This is an interest subsidy scheme that has been named as 'Credit Linked Subsidy Scheme for Middle Income Groups - CLSS(MIG)'. As per this new subsidy, middle-income groups with incomes in the eligible range will get a subsidy on their interest rate of three to four percent.

The Pradhan Mantri Awas Yojana is mainly focused on home loans for the middle-income groups. Here’s who is eligible for the subsidy under this scheme:

1. People whose incomes falls in the range of 6 lacs to 18 lacs are eligible for this subsidy under the CLSS.

2. People whose housing loans were approved and those whose home loan application was in review since 1st January 2017 are eligible for this subsidy.

3. Peoples who have an annual income of 12 lacs are eligible for a subsidy of four percent on their home loan of up to 9 lacs. People who have an annual income of 18 lacs are eligible for a subsidy of three percent on a home loan of 12 lacs according to the Prime Ministers’ address on the eve of New Year.

Here’s is how home loan EMIs and interest rates will be affected under the new scheme:

1. The interest subsidy of four per cent under CLSS(MIG) will bring down EMIs of borrowers by Rs 2,062 per month on a housing loan of Rs 9 lakh and interest subsidy of three per cent would lower the EMI by Rs 2,019 on a loan of Rs 12 lakh, if the normal housing loan interest rate is taken as 8.65 per cent.

2. The total interest subsidy accrued on these loan amounts will be paid to the borrowers up front in one go. This in turn will reduce the burden of EMI on the user.

3. The tenure of these home loans has been specified as 20 years or as preferred by the borrower, whichever is lower.

Under the guidelines of this scheme, preference will be given to women. Widows, single working-women, persons belonging to scheduled castes and scheduled tribes, backward classes, differently abled and transgender people will be given more preference.

Non-banking finance companies and micro finance institutions are also recognised under this scheme in order to ensure that maximum number of people can benefit from it.  

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Why Home Loan Application get Rejected

While preparing your home loan application you think about everything. You do your research; you check your credit score, the documents required for home loan. But do you think about why, despite doing all the necessary things, your loan application might still get rejected?

With the disposable income of the working class increasing day by day and property providing a great investment opportunity, the number of people applying for home loans is ever increasing. The A lot of times, despite being in a good credit space, having a good stable monthly income and doing everything else right, your home loan application may still get rejected. 

Here are a few uncommon reasons why that might happen:

1.    Builders today, have tie ups with banks. If the builder you’re seeking a property from, is not in a tie up with your bank or isn’t approved by your bank, your loan may get rejected. It’s a good idea to check with your builder about which banks he has got approvals from.

2.    A builder may figure in a bank's list of approved builders, but a specific project launched by him may not have been approved by the concerned bank. In addition, there are likely to be cases where particular phases of a project may not have bank approval. So before applying for your home loan it’s extremely important to check with your builder about all these approvals.

3.    In the case of resale property, if the buyer and seller mutually decide on a price for a property and the buyer seeks a loan, the bank or loan provider re-evaluate the price of the property and if the value is lower than the price decided by the buyer and seller, the loan stands a chance to be rejected.

4.   Defaulters are blacklisted along with their properties by banks and housing finance providers. If you happen to live in a house that has been blacklisted your application may be rejected.

5.      Your job stability is extremely important when you apply for a loan. Some banks even insist that you need to be employed with a concern for at least three years to be eligible for a loan.