Is Home Loan Balance Transfer Eligible for PMAY Subsidy?

The Pradhan Mantri Awas Yojana (PMAY), is an initiative taken by the Ministry of Housing and Urban Affair which was launched on June 25th 2015. The scheme was started with the primary objective of providing affordable housing to all people across the nation. Formerly named ‘Housing for All,’ the scheme aims at offering affordable housing solution to all Indian citizens by the year  - 2024.

Salient Features of PMAY

The scheme allows a subsidized interest rate of 6.50% for the tenure of 20 years or during the tenure of the loan, whichever is lower. This rate is offered for a loan amount of up to Rs, 6 Lakhs for all the eligible people. Beyond the cap of 6 Lakhs, a non-subsidized interest rate will be applicable for the additional amount. In case of women, the subsidized rate of interest will be 6.50% for tenure of 20 years or during the tenure of the loan, whichever is lower. This rate is offered for a loan amount of up to 6 Lakhs. Beyond the cap of Rs, 6 Lakhs, a non-subsidized interest rate will be applicable for the additional amount.

Some of the most significant aspects of this much-coveted housing scheme are:

Provision of financial assistance to the weakest sections of society, so that they can construct a house, or upgrade their existing one, to enjoy an acceptable quality of life.

• The replacement of all temporary housing solutions with permanent ones, especially in rural areas.
• Provision of affordable housing through a Credit-Linked Subsidy.
• Redevelopment of slum areas, using the existing land, with the assistance of the private sector.
• Provision of affordable housing solutions in partnership with private and public sector organisations.
• House construction and enhancement lead by beneficiaries.

Eligibility for PMAY

Only the below-mentioned sections of the society are eligible for grants under this scheme.

Economically Weaker Section or EWS, i.e., households with annual income of up to 3 Lakhs per annum.

Low-Income Grade or LIG, i.e., families with annual revenue between 3 Lakhs to 6 Lakhs per annum.

Minority Groups such as Scheduled Caste, Scheduled Tribes or Other Backward Classes.

Women belonging to EWS, LIG or minority groups are also eligible for subsidized loans under PMAY. To prove the eligibility for the loan, the applicant needs to furnish sufficient proof of belonging to one of the categories mentioned above. Failure to do so will lead in the rejection of the loan.

Home Loan Balance Transfer (HLBT)

Home Loan Balance Transfer is nothing but a tool that proves to be extremely helpful when it comes to reducing the rate of interest applicable to the loan amount. Using this alternative, you can easily transfer your entire outstanding Home Loan balance from an existing bank to another bank or housing finance company which offers lower rates of interest.

However, before you do so, it is recommended for you to approach the existing lender and request for a lower interest rate. Thanks to Reserve Bank of India’s MCLR (marginal cost of funds based lending rate) policy, chances are that your existing lender will align the rate of interest. Because the interest levied as per the PMAY is much lower than the usual Home Loan interest rate, many people consider utilising the HLBT facility to enjoy lower rates on their existing loans.

In such case, it the existing loan was availed on or after 17th of June, 2015 and the candidate fulfils the eligibility criteria they may Apply for Home Loan Balance Transfer. That being said, one must not be too hopeful for getting an approval since the funds delegated for Pradhan Mantri Awas Yojana have almost exhausted. In the wake of this deficiency of funds, the National Housing Board has indicated that it will give priority to new cases over HLBT cases.

Even if you are not eligible under the PMAY, you can always try to Find a Home Loan Balance Transfer Offer that helps reduce the burden of hefty EMIs and offers you a lower interest rate. Now that you know all that there is to about Home Loan Balance Transfer and the eligibility of the same for PMAY, we hope that you will be able to take more informed decision regarding your budget for purchasing or constructing a new house.

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