Your home can be a good investment


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   Buy a home under PMAY and you will stand to save a huge amount of money. It will give you better return on investment.

   Buying a home is a calculated risk. Putting a huge chunk of your hardearned money into one project needs lot of studies and research. But thanks to some support from the government, your investment will stand to give you an equally big amount in the long run.

   If you are buying a home for investment purpose you will end up saving a huge amount. Your investment bet will earn you good amount of money if you intend to sell the unit say after 10 or 20 years.

   Surabhi Arora, Senior Associate Director, Research, Colliers International India, says, “The Pradhan Mantri Awas Yojna (PMAY) was launched with an aim to achieve Housing for All by 2022, and primarily target end-users. The demand side push, under this scheme is credit-linked subsidy scheme.”

   Earlier, the Credit Linked Subsidy Scheme (CLSS) under PMAY on home loans was limited to Economically Weaker Section (EWS) and Lower Income group (LIG). EWS and LIG section is eligible for an interest rate subsidy at rate of 6.5 per cent for a tenure of 20 years, or whichever is lower.

   However, in 2017 the PMAY scheme was extended to middle-income group having income above 12 lakhs and up 18 lakh.

   Accordingly, for income level up to 12 lakh, 4-percent subsidy is allowed, while for 18 lakh income group, a subsidy of 3 percent is allowed. These subsidies will entail a saving of about 2000 per month for a 20-year loan of about 10 lakh. This subsidy will be available for housing loans available both for new construction and addition/ alteration to existing dwelling units.

   In other words, you will end up saving 480,000. So, buying a home under PMAY will help you save 480,000 and if you want to sell the same home it will automatically give you additional profit of 480,000 plus the prevailing market price. In other words, the same home will yield you a profit of at least 10,000,00.

   As the beneficiary can opt for a unit larger than 600 sq ft, the emerging affordable areas, which are driven by end-user demand are benefitting under CLSS that can boost demand from first time homebuyers. However, the scheme is good for first time buyers and for end-use purpose. The speculative short term gains are unlikely in affordable housing, especially with the market is getting mature and transparent. “One should look for long term investment in real estate with an investment horizon of at least 5 to 10 years. Given a good location and development of infrastructure as planned, one can get a decent return in 10 years,” adds Arora.

   Amit Modi, Director of a leading real estate group, says, “We must appreciate the fact that the government is very serious on the mission of Housing for All and in the same light we have seen some extremely aggressive approach towards affordable housing.

   Sometimes, the high interest rate on home loans create financial instability for people who wish to buy their own houses and makes them hesitant to come forward. To make things easier, the government has introduced the Pradhan Mantri Awas Yojana (PMAY) under the Credit Linked Subsidy Scheme, which aims at ‘Housing for All by 2022′ to provide homes (pucca houses) to more than 18 million people in the urban areas and 30 million people in the rural areas by 2022.”

   Recently, the government has extended the period to avail the credit-linked subsidy scheme (CLSS) under the PMAY (Pradhan Mantri Awas Yojana) on home loans for middle-income from December 31, 2017 to March 31, 2019. This will benefit first time homebuyers with annual income between 6 to 18 lakh a year and save interest payout of up to 2.35 lakh on a 20-year loan. Though it’s a great initiative by the government but getting a land to implement this scheme is also a challenge right now.

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source: The Times of India.

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