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07 May 06:30

All You Need To Know About Pradhan Mantri Awas Yojana(PMAY)

by gssadarsh

What is it? PMAY was launched in June 2015 in an attempt to make ‘Housing For All’ a reality by 2022.  The scheme originally was meant to cover the economically weaker section (EWS = annual income not exceeding ₹3 lakh) and low income group section (LIG = annual income not exceeding ₹6 lakh) but now covers the mid-income group (MIG) too.


The PMAY scheme intends to build homes for slum dwellers in conjunction with private developers.  It also plans to give credit-linked subsidy to weaker sections on loans taken for new construction or renovating existing homes.

For those in the EWS and LIG category, for a loan of up to ₹6 lakh the interest subsidy is 6.5% for a tenure of 15 years.  Recently, the government increased the loan to ₹12 lakh for the mid-income category. The interest subsidy on loans upto ₹12 lakh will be 3%.  In rural areas, an interest subsidy of 3% is offered on loans up to ₹2 lakh for constructing new homes or extension of old homes.

The government offers financial assistance to the tune of ₹1.5 lakh for affordable housing projects in partnership with states/union territories for the EWS.

Why is it important?

While developers in India’s metropolitan cities are saddled with lakhs of unsold residences costing upwards of ₹50 lakh, the country has an estimated shortage of nearly 20 million housing units for the rural and urban poor at far lower price points of ₹5 to 15 lakh.  PMAY intends to address this shortfall.

The PMAY will hopefully boost India’s realty sector to reduce its obsession with affluent home buyers in the cities.

How does it affect me?

For those in the lower and mid-income groups, PMAY reduces the cost of acquiring a home by ₹1 lakh to ₹2.3 lakh. The increase in loan amount to ₹12 lakh to the mid-income group may make more homes within the reach of the urban poor.

This scheme combined with falling interest rates means improved home loan growth for banks and NBFCs focused on this segment.  A pickup in demand for affordable housing will not only provide an impetus to the performance of banks and housing finance companies but also support growth of allied businesses such as cement and steel.  This in turn will increase employment opportunities and drive economic growth further. GSS is involved in developing affordable housing layouts around Mysore.

The post All You Need To Know About Pradhan Mantri Awas Yojana(PMAY) appeared first on GSS Project Consultants.

07 May 06:30

How much home loan can i get for my salary?

by gssadarsh

How much loan you can get from a bank is the question you have when you want to buy something and looking at loan options.

This article discusses the above-mentioned issue at length.

The rule of thumb that all banks follow is multiply your net salary by 60 to reach the maximum loan amount you can get.  This is common to both private and public sector banks.

Usually, banks provide home loans up to 60 times your monthly net pay or take-home pay. This varies from a case-to-case basis and your personal credit worthiness.

This is a sample monthly pay slip:

Earnings    —-> Amount    —–>Deductions    ——->    Amount

Basic Salary  15,000 PF  1800
Conveyance Allowance  800 IT  1250
HRA  7500
LTA  3500
Medical Allowance  1250
Special Allowance  25,000
Total  53,050 3050
Net pay  50,000 (53,050 – 3050)

LTA and MA are not considered components of take-home pay.  Hence, 3500 + 1250 = 4750 is deducted from net pay (50,000 – 4750 = 45,250.)  You are eligible for loan on 45,250.  That would be 45,250 x 60 = 27,15,000.

There are other factors a bank would take into account such as loans you may have on credit cards and other loans.  After deducting the monthly outgo on these, the bank will estimate your actual monthly ‘take home’.  Your actual loan will depend on this amount.

The post How much home loan can i get for my salary? appeared first on GSS Project Consultants.