Buying a home for your family and yourself is a dream for many. However, complex documentation processes, high capital investment rates and tax implications can often act as deterrents to this dream. Purchasing a home with savings is not a viable financial step all can afford, hence availing of a home loan may be essential because making this significant investment requires a lot of money. Further, a home loan allows you to pay back the borrowed amount in instalments that suit your financial capacity the most.
Today, women are financially independent. This allows them to make investment decisions that secure their future as well as contribute financially to key expenses such as home loans. To this effect, home loans for women offer multiple advantages like higher loan eligibility, tax benefits, lower interest rates, the ability to add spouses as co-applicants, etc.
This article aims to specifically discuss numerous benefits offered by housing loans for women while also clarifying the eligibility criteria and the documentation requirements requisite for availing of such loans.
Benefits Of Home Loans For Women
Gathering funds for a huge investment like getting a home is not an easy task. Hence, a home loan may be a good option. As a woman, here are the following advantages that you can enjoy on home loans:
Lower Interest Rates Offered
When you avail a home loan, you must wisely introspect the equated monthly instalments (EMI) with interest. This is because a high-interest rate will increase the cost of your loan, and you will have to pay a lot of money in the form of interest, which could drain your finances and savings.
Certain lenders offer women special housing loan interest rates. Indian women get a concession on the interest rate payable, which may be between 0.1% to 0.5%. Even though this percentage may seem less, it significantly affects the EMI. Let’s understand the reason for this. If you take a home loan of a considerable amount, say in lakhs, the interest rate, which is calculated on the balance unpaid principal amount, will also be high. So, even a tiny concession can help you.
For example, Mr. Arun took a home loan of Rs. 50,00,000 for a tenure of 20 years and at an interest rate of 8.5% per annum. Miss Bipasha also took a loan of the same amount for the same tenure but she got a concession of 0.50% in the interest rate. This makes her home loan interest rate 8.0%.
Mr. Arun’s interest outflow is Rs. 708,333. Since Miss Bipasha receives the benefit of the 0.5% reduced interest rate, she pays Rs. 666,666 as her interest outflow. As such, her savings from interest outflow is Rs. 41,667.
Co-Borrowing Tax Benefits
Women can apply as co-borrowers of a home loan with their spouses. This will help increase the chance of availing of a loan because their joint income will be considered for this purpose. You may get a high loan amount approved because of the high combined income. With this high amount, you can choose a better or more suitable house you have always wanted.
As co-borrowers, both women and men can avail the tax benefits on the interest and EMI payments. This is because they both have different income sources. If you have a home loan provisional certificate, you can avail tax benefits under Section 24, Section 80EE, Section 80 EEA and Section 80C. With a co-borrower, you can enjoy the benefits twice (both the co-borrowers get the benefit). For a better understanding of the different deductions available on a home loan, read our blog on home loan provisional certificates.
Reduction In Stamp Duty
Offering a lower stamp duty to women is an initiative taken by the Government. Many State Governments offer a reduction in stamp duty as a home loan benefit for women. The approximate reduction may be between 1% to 2% on the stamp value. Again, this may seem like a minimal reduction rate, but when evaluated with the full stamp duty, it is a considerable portion for anyone. This implies that if the stamp value is worth Rs.90,00,000, women get a deduction of Rs.90,000. This is not a small sum of money if noticed. This money can be saved and used for EMI payments or to meet any other financial obligations in the near future.
A Government Initiative For Women’s Empowerment
In the past, the Government of India had developed a unique scheme. The Pradhan Mantri Awas Yojana (PMAY) initiative was started on 25th June 2015 with the aim of providing “pucca” houses to the beneficiaries in Urban areas by the end of 2022. However, this scheme has a condition where the female head of the applicant’s family should be the owner or co-owner of the house. Under the Credit Linked Subsidy Scheme of this Yojana, people belonging to the economically weak section, low-income groups, middle-income group one and middle-income group two, who are taking home loans from banks and NBFCs and other institutions, get a substantial subsidy on the interest rate up to a maximum amount of Rs.6 lakh, Rs.9 lakh and Rs.12 lakh respectively.
Other Significant Benefits
We have discussed the main benefits above. However, home loans for women offer other considerable benefits as well. Here are a few of them:
- A few banks extend offers to women unrelated to the loan. These offers could be free holidays, jewellery vouchers, gold coins, or free-of-charge credit cards.
- Women get to choose a longer tenure of up to 30 years for their loan. This will result in lower EMIs and decrease the burden on their shoulders. Moreover, they do not have to pay any charges on prepayment or foreclosure of the loan. Foreclosure of a loan implies that the entire amount due is repaid in one single instalment instead of EMIs.
- A few lenders offer women a higher borrowing amount to attract them to avail of their home loans. This is because women are said to be better borrowers. The default rate of women has historically been lower than that of men.
Eligibility Criteria Of Home Loans For Women
While different financial institutions have varying eligibility criteria, some of the common ones include: :
- You must be an Indian citizen.
- You should be a minimum of 20 years old. However, this may vary between lenders.
- You have to be either salaried or a self-employed individual with a minimum work experience of 2 years.
- Your family’s monthly income should be Rs.15,000 or more. This may also change depending on your lender.
- A good credit score will be helpful for the quick sanction of your loan.
Documents Required For The Application Of Home Loans For Women
To apply for a home loan, you will be required to submit the following documents:
- Your home loan application form is properly filled with all the correct details.
- Identification proof like your Aadhar card, PAN card, Voter ID card or Passport.
- Address proof like your electricity bill, telephone bill, Aadhar card, or passport. Whichever document you give, it should be a government-approved document.
- Financial proof like your bank statements for the past six months, employment proof, salary slips and your Income Tax Return for the past three years.
- A few copies of your passport-sized photograph.
In recent times, the real estate market has been going up due to inflation. Hence, if you want to invest in a house, taking a home loan could be a great option. In addition, the reliefs that home loans for women come with should be more of a reason to consider them. Several private banks offer special housing loans for women that you might want to consider. The loans range from Rs.2 lakh to Rs.10 crore.
Different types of housing loans for women with benefits support another benefit altogether. This benefit is the growth of women’s empowerment in our society. These loans will help them become financially independent and prove they are economically stable.
Frequently Asked Questions
Can a homemaker apply for a home loan?
Most lenders offer loans to people who are either salaried employees or self-employed. However, a homemaker could be a co-borrower in a home loan applied by her husband.
Can I avail of subsidies under PMAY without a female owner?
No, it is not possible to avail of subsidy benefits under PMAY without a female owner/co-owner.
Are there any specific schemes for home loans for women?
Yes, there are a few banks that offer specific schemes of home loans for women. You may contact your bank and enquire about any special offers available.
Nishant is a qualified lawyer from NALSAR University of Law, Hyderabad having 7+ years of experience and is the Chief Compliance and Legal Officer at Wint Wealth. He has been working in the finance and wealth management space for the past 5+ years and is an NISM certified mutual fund expert.
He has previously worked for Khaitan & Co and Scripbox.