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Finance

5 Amazing Benefits of Home Loans for Women

With the increasing employment and financial independence rate of women in India, they now play active roles in household decisions. A similar scenario is evident in their home buying power as well. To encourage female homeownership in the country, the Indian government has instructed home loan lenders to offer additional benefits to female home loan applicants and co-applicants. For instance, it’s easy to find NBFCs with lower current home loan interest rates for women. Let’s explore the top five amazing benefits of home loans for women.

Lower Interest Rate and Borrowing Cost

Women with a lower DTI ratio and other financial obligations usually demonstrate a better track record of repayments. They are also more responsible in nature, with a lower chance of default. Consequently, lenders find them more reliable for EMI repayments and try to attract them with lower interest rates. 

Financial institutions often lend them at an interest rate of .5-1% less than other applicants. It largely impacts their EMIs, making repayment stress-free for female borrowers. Generally, borrowing a home loan and repaying it on time is easier for women than men.

Lower Stamp Duty Charges

State governments impose stamp duty charges, a mandatory tax levied on a transfer or sale of a property. The charges depend on various factors, like the property’s location, status, usage, age, and value. It might vary between states according to their internal policies. 

Stamp duty charges vary from 4 to 10% of the property’s cost. Therefore, even a slight discount makes a huge difference. Usually, NBFCs offer 1-2% lower stamp duty charges to women than to men. Although it seems minor, the cost-saving can be substantial considering the property’s high cost.

Longer Repayment Terms

Women home loan applicants are eligible for a longer loan repayment tenure, giving them a chance to lower their EMIs and save for other planned financial goals. Furthermore, it reduces their stress and enables them to fulfil other commitments while handling the home loan repayment. Female borrowers can easily opt for a loan tenure of 25-30 years, based on their housing loan eligibility, repayment capacity, and lender’s policy. With lower pre-payment charges, they can experience added convenience as a female home loan borrower.

Tax Benefits

Women can avail several tax benefits while availing of a home loan. They can avail of benefits of up to Rs. 3.5 lakhs under sections 80C and 24B of the Income Tax Act 1961. They may avail of a tax deduction of up to Rs. 1.5 lakhs on the principal amount and up to 2 lakhs on the interest cost. Moreover, they can also claim an additional tax deduction of up to Rs. 1.5 lakhs under the 80EEA section. 

Those who take a joint loan with their husband or another eligible co-applicant can increase their overall tax benefits. Both co-applicants can claim tax deductions on the principal amount and the current home loan interest rates. However, one condition is that the property’s conveyance or sales deed should have the names of both the co-applicants as the owner, with the woman’s name as the primary applicant.

Secure Financial Future with the PMAY Scheme 

Female home loan borrowers can avail of significant benefits under the PMAY – CLSS (Pradhan Mantri Awas Yojana – Credit Linked Subsidy Scheme). The scheme makes it mandatory to co-apply for a home loan with a woman. It enables women to secure their financial future if they are widowed or in old age. The scheme prefers female buyers over others to give an interest subsidy of up to Rs. 2.67 lakhs. The borrower receives the subsidy upfront on the loan amount, lowering the total interest cost.

A female borrower can enjoy benefits under the scheme if they fulfil the following conditions:

  • At least one woman should be registered as the new property’s owner, whether she buys the property or not.
  • She or her immediate family should not own a house anywhere else in India.

As evident, there are several benefits women may avail themselves of by taking a home loan to buy a house. Easier loan approval and repayment terms empower women and give them financial independence to build their dream house and accommodate their families. Use a home loan eligibility calculator to know your loan amount and compare lenders to get better deals than the current home loan interest rates.

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