Buying a house is a need that requires a large investment. It requires due diligence towards factors like budget, loans, down payment, and many other minor details. Going through all these minor details takes time and effort. Furthermore, not all options you look at will be affordable. Government housing schemes help you get your dream house without hassles.
Government housing schemes include houses, properties, flats and other housing options sold to people at affordable rates. The central or state governments fund the building of these projects, which are then made available to anyone interested.
In India, the Ministry of Housing and Urban Affairs (MoHUA) overlooks the launch and functioning of various housing schemes.
Why should you look at government housing schemes?
1. You get home loan subsidies.
Government housing projects provide subsidies that you can avail of on home loans. Thus, your monthly EMIs become more affordable.
On average, you can avail of a subsidy anywhere between 3-6.5% on a home loan with a tenure of 20 years. Even a subsidy as small as 0.5% can help you save a lot of money in the long term.
For example, a 3% subsidy on Rs. 50 lakh loan with an interest rate of 9% p.a. can reduce your total interest payments from Rs. 57.9 Lakh (Rs. 45,000 EMI) to a net interest payment of Rs. 35.97 Lakh (Rs. 36,000 EMI) over 20 years.
2. Your investments are safer.
Real estate has become the go-to option for many investors because rental and property values are increasing at a rate of 6-10% p.a. Furthermore, real estate provides an excellent hedge against market volatility.
In contrast to the volatility of the stock market, property values rise over time. For this reason, the housing market is one of the safest investments for long-term returns.
However, with so many buildings and properties going under development and redevelopment, it can be confusing to choose one. Furthermore, development projects of independent contractors are not always completed. It makes government housing schemes a safer option.
3. You get possession on time.
The most significant advantage of a government housing scheme is that you get possession on time. Unlike private projects, there are rarely any holdups during government projects.
In the case of private builders, there are many unexpected hurdles. These include a lack of liquidity, land disputes, and promoters losing confidence in the project. This hinders timely possession, which is a major concern for many.
You will not face these problems with government housing schemes. These projects follow stringent legal requirements in all aspects and are therefore rarely delayed.
4. The property rates are fair.
Government housing schemes offer lower rates on properties. Being government-backed schemes, they are not high-profit schemes. Rather, they are focused on social and rural development.
Private contractors and developers have a profit margin in each project. This margin is reflected in your overall rate and the amount you have to offer to get the property. In contrast, government-led schemes are focused on reducing homeless people, making properties more affordable or urban/rural growth. Therefore, they have little (if any) profit margin.
Schemes like PMAY offer prices lower than market rates.
5. The eligibility criteria are fair and strict.
Government-backed housing schemes are available to all investors. There is no discrimination. All those who qualify as first-time homebuyers can buy their dream house, regardless of whether they are a member of the economically weaker section (EWS) or a high-income group. This advantage is not available for private contractors who may sell property based on their relationship with the buyer.
6. Project completion is guaranteed.
For government housing schemes, only minor legal delays affect project completion. Generally, when the government is the sponsor, there is no risk with legal processes.
As a result, the buyer may be certain that developers will finish the project on time. You may not get this advantage with private contractors who can abandon their projects if they face too much loss.
Which are some of the famous housing schemes?
1. Pradhan Mantri Awas Yojana (PMAY)
PMAY guarantees that every qualified urban household has a pucca house by 2022. It addresses the scarcity of urban housing among income groups and slum residents.
2. Rajiv Gandhi Awas Yojana Housing Scheme (RAY)
RAY was launched by the Government of India in 2009. It falls under the Ministry of Housing and Urban Property Alleviation (MHUPA). It seeks to eradicate slums in India and regulate unlawful structures.
3. Aponar Apon Ghar Scheme (Assam)
This scheme offers low-interest-rate home loans to Assam state’s government employees. Applicants must be permanent residents of Assam. They must also be employed in a government department for 5 years.
4. Delhi Development Authority (DDA) Housing Scheme
DDA aims to meet the housing demands in the nation’s capital. DDA falls under the umbrella of the PMAY. The housing program gets dispersed among a few chosen categories. These include the high-income group, middle-income group, low-income group, and EWS group.
Other Schemes include:
- West Bengal BHS
- Haryana Housing BHS
- Kerala Housing BHS
- Affordable Rental Housing Complexe
For those purchasing their first house, government housing programs offer various benefits. They are the most comprehensive housing schemes anyone could ask for as they have low-interest rates, desirable locations, and prompt handing over of the property.
Government Housing Schemes are the best option for first-time home buyers in 2022. If you’ve decided to use a government housing scheme to build your ideal house, consider your finances before you purchase a property. You can apply for a home loan if you do not have the capital needed for the property.