In the past couple of years, Affordable Housing plans have become quite popular. These plans are mainly beneficial for the lower-priced affordable housing segment and play an important role in improving healthcare facilities and living conditions. With access to affordable housing, families can create a stable environment, thus maintaining both physical and mental health.
For those unaware of affordable housing, here’s what you need to know:
What are Affordable Housing schemes?
Affordable Housing schemes primarily aid people in the low-income group to buy accommodation. The Government of India is offering subsidies on low-cost home loans. This means that those in the low-income group can apply for home loan plans and buy houses with proper financial planning.
Some of India’s prominent Affordable Housing Schemes
- Pradhan Mantri Awas Yojana (PMAY)
PMAY aims to provide low-cost housing to economically weaker sections from both urban and rural areas. This scheme aims to erect 2 crore houses by the end of 2022, offering an interest subsidy on home finance for first-time buyers across urban areas.
- Rajiv Awas Yojana (RAY)
The primary goal of this scheme is to establish a slum-free India and work towards including illegal properties under a formalized system. This scheme aims to provide fundamental civic infrastructure, social amenities, and decent shelter.
- Maharashtra Housing and Area Development Authority (MHADA)
This scheme is a lottery initiative to provide housing to residents of Maharashtra from various income groups. People can also use their PMAY subsidy to own an MHADA house.
Reason for this scheme’s success
The low-income housing market in India is worth a lot of money. On average, there are about 2.2 crore households across the country. With such potential, it is no surprise that lenders are eager to jump in and invest.
Financial institutions have started allocating a large part of the monthly home loan disbursals towards the low-cost housing market. Even the Reserve Bank of India has recently taken steps to relax its regulations on external commercial borrowings. The reason for this is to encourage people to take loans for affordable housing units.
Development of the home loan segment in India
As per RBI guidelines, banks are supposed to use MCLR as their internal benchmark for lending rates. Lenders have already started the process of giving out the repo-rate cut benefits to all customers. With these cuts in interest rates, home loans are now much more affordable than they were a few months ago. This means that borrowers can now pay smaller monthly installments at the same loan amount! They can also opt for a shorter repayment tenure if they are looking to save more on the interest.
With this, a home loan has become a great option for someone looking for financial support to buy a house. With the slow market keeping the real estate prices on the low, the home loan segment is currently booming. Today, all that a borrower needs to worry about is getting their documents required for home loan in place.
With the cuts in the home loan interest rates, MCLR reform, as well as a low-cost housing scheme, thousands of people now have a great opportunity of buying houses. Now, before you decide to apply for a home loan, make sure to maintain a good credit score and use a home loan EMI calculator to figure out monthly installments. This will help avoid any financial struggles in the future.
