Financial independence is certainly making way for a better and comfortable lifestyle. Under such circumstances, owning a home is almost a universal dream. However, the taxes, EMIs, and all other costs associated makes it difficult for most people to make a purchase decision. Well, guess what? If you’re a woman planning to buy your own home or you want to be a co-borrower, the challenges are less as compared to individual male home loan borrowers.
In a primer by BankBazaar on Home Loan Refinancing published earlier this year, it was concluded that women are applying for bigger home loans. There was a 7.41% marginal upsurge in the average home loan ticket size take by women as it went from Rs. 29.78 lakh in FY20 to Rs. 31.98 lakh in FY21. Multiple causes led to the changes regarding the demand for private residential spaces and the loans applied for that purpose.
Here are 5 reasons why women should apply for home loans or be a co-borrower for the same.
Increases chances of loan approval
Researches prove that women tend to manage credit better as they ensure timely and full repayments. Thus, a woman home loan borrower or co-borrower has better chances of getting the loan sanctioned. A cherry on the top would be a stable income and high credit scores. As far as joint loans are considered, it is always good to split the responsibility between two which further reduces the chances of faulting the repayment risk.
Reduced rates of interest
Regardless of whether a woman is the primary or the secondary loan applicant, they are usually offered home loans at lower interest rates than men. Often the difference ranges between 0.05 per cent to 0.10 per cent. To understand this better, let’s consider this example. For instance, if the man of the house is getting the home loan approved at 6.70% per annum, applying for the same home loan with his wife as the co-borrower might reduce it to 5.70% per annum. Thus, even though the difference is marginal, it can show a significant positive sign on the monthly EMI’s to be paid for the next decade or more.
Longer tenures of repayment
As per the home loan policies, women who apply for a home loan as the primary or the secondary applicants, are eligible for a repayment tenure of up to 30 years of age or till the time they turn 70 (whichever happens at the earliest). On the contrary, male applicants are usually eligible for a loan repayment tenure of 20 years or till they are of 65 years of age, whichever is earlier. A similar example can be considered to understand the benefits of this better. For instance, if a man applies for a home loan and his repayment tenure is 15 years (before he turns 65), adding his wife as the co-borrower can easily add 5 to 10 years to his repayment tenure.
Privileges in stamp duty
Stamp duty adds up to the overall cost of acquiring a property of your own. A concession is given to women property buyers ranging from 1-2%. Ideally, this can result to saving any amount between Rs 40,000 to Rs 80,000.
When applying for a joint home loan, you can claim for certain tax deduction benefits on the interest and the principal as the co-borrower. The Sections 80C and Section 24 of the Income Tax Act concludes that all co-borrowers as joint owners of a property are eligible to get a tax deduction benefit of up to Rs.1.5 lakh on the principal repaid and another Rs.2 lakh on the interest paid.
If a woman is the primary applicant of a home loan, it increases the chances of getting a bigger loan sanctioned. With the Pradhan Mantri Awas Yojana (PMAY), the government also encourages women to earn credit-linked subsidies. The PMAY suggests mandatory registration of the woman of the household for property purchases. The perks of this scheme can result to an interest subsidy of up to 6%.
These schemes and benefits are all prepared in order to encourage women property owners. This also promotes their rights in a certain way. However, availing the benefits of these considerations can help you and/ or your partner to an extent when it comes to buying your own property. In case you’re planning to invest in real estate in Bangalore, do check out our services.