Traditionally, home buying is looked upon as a men-only phenomenon in India, wherein participation of women in such financial matters and decisions has been a bare minimum occurrence. However, in the past few decades, with the rise in awareness regarding personal finance among women & the enhanced participation of women in the workforce, there has been an ensuing improvement in their involvement in financial matters.
Today, women are proactively participating in financial matters to attain their major life goals like purchasing a home through a home, preparing corpus for their child’s higher education and their marriage, building post-retirement corpus etc.
Here, in this article, we will learn why women are actively participating in meeting their goal of owning a home and what are the benefits linked with owning a home through a home loan of SBI home loan, Bank of Baroda home loan & through home loans of various other banks and HFCs.
Women are making an effort to own a home through home loans because of various reasons. Firstly, as discussed before, the rise in awareness and their growing participation to work in corporate and other sectors is due to the rise. The next reason may be to diversify their investments as a part of their long term financial plan.
According to a consumer survey conducted by ANAROCK LIC, about 57% of women respondents expressed their preference to invest in real estate, followed by 28% who preferred stock markets, 11% opted for fixed deposits, and about 4% looked upon gold as an investment asset class. Moreover, among those wanting to purchase property as an investment, about 45% of women home seekers look at selling the property after apt appreciation. In comparison, 32% of them look forward to earning a steady rental income through such properties.
On the contrary, 38% of men purchase houses as an investment, while 62% of men look to purchase property for their end-use. Such facts specify the potential to incentivise women with higher benefits for growing the housing sectors from the government’s goal of providing ‘Housing for All’.
Here, we will mention some of the existing features and benefits provided by most financial institutions like SBI home loan, Bank of Baroda home loan etc., for availing a home loan in India.
Comparatively lower rate of interest
Women home loan buyers generally hold better credit history and even are profiled as trustworthy by most lenders. Owing to this reason, women enjoy the benefit of discounted rates on numerous lending products involving home loans. The second reason lenders offer women lower interest rates is to encourage more women to own a home.
As home loans come with huge loan amounts, getting a concession on their rates can be exceedingly useful and can make it very simple for women to afford and repay their dues on time. Rates offered to women may usually be lower by 5 bps, which can lower the EMI amount and make servicing of repayments easier. Financial institutions like SBI home loan & PNB Housing Loan offers 5 bps concession to their women borrowers.
Let us learn this with an example if a borrower avails a home loan of Rs 40 lakh from an SBI home loan for 20 years, and interest rates offered to women will range between 6.70% – 7.70% p.a while for males, the interest rate would range between 6.75% – 7.75%. If we consider just the lowest rates offered, the EMI for women would be Rs 30,296 and the overall interest payable would be Rs 32,70,985. For men, the EMI would be Rs 30,415 and the overall interest payable would be Rs 32,99,494. As an outcome, savings in interest for women borrowers would be nearly Rs 30,000.
Lower stamp duty & tax deductions
State governments mostly have made it mandatory to lower the cost of stamp duty to up to 2% for the women borrowers of home loans, which is a substantial saving amount in total property’s cost. This basic step has further incentivised women to purchase houses in India.
For instance, Rajasthan offers a 1% reduction on their stamp duty, while NCR women may get a 2% reduction regardless of joint or sole ownership. Thus, on the house worth Rs 40 lakh, women borrowers can save up to Rs 40,000 to 80,000. Besides this, women even get the opportunity to claim a tax benefit of up to 1.5 lakh on the principal component as per Section 80C & Rs 2 lakh on interest repayments.
In the case of joint home loans, note that both wife and husband can claim the tax benefit, which is actually a combined deduction of Rs 4 lakh on interest constituent and Rs 3 lakh on the principal component.
Accessibility to the higher loan amount and extended repayment tenure
The next crucial advantage of home loans for women is their eligibility to avail higher loan amounts and at longer repayment tenures. Generally, to attract women borrowers, most lenders enhance home eligibility criteria like provision of loan amounts between Rs 30 lakh and Rs 3.5 crore for higher loan tenures of up to 25-30 years. Such additional benefits of provision of less stringent eligibility criteria is a crucial benefit for women.
Game Changer – The PMAY scheme
With the ‘housing for all initiative by the government, benefits provided to the women borrowers applying for the affordable home loans have been enhanced. As per the government, it is mandatory for women borrowers to avail a subsidy on interest for up to Rs 2.67 lakh.
Through such schemes, women are given higher preference, which makes it easier for them to apply for home loans without having to face any discrimination. Women across all sectors, all ages, marital statuses and classes have the financial freedom of availing home loans with such benefits, which makes them a step forward towards women empowerment. While there are various advantages that are offered to women on home loans, the only thing one should note is to select the lender that offers the lowest rate for the optimal loan tenure and loan amount.