Many women have entered the workforce in India in the last few decades, and are now actively participating in financial decisions, too.
With the country’s socio-economic landscape undergoing change, these financially independent women are now increasingly taking home loans for buying their own little space.
According to Atul Monga, CEO and co-founder, Basic Home Loan, women borrowers can avail themselves of several advantage while taking a home loan, either as a single applicant or a co-applicant.
As a matter of fact, various government policies also support and promote women homeownership in India. For instance, to avail homes under the government’s flagship Pradhan Mantri Awas Yojna (PMAY) introduced in 2015, the houses have to be mandatorily registered either in a woman’s name or with a woman as the co-owner. This was done to empower women belonging to the lower-income segments.
Here’s a look at some of the incentives exclusively available to women homebuyers.
Lower Stamp Duty: This is another benefit available to women homebuyers. Stamp duty charges are lower if the property is registered in a woman’s name, albeit with variations from state to state.
Says Santhosh Kumar, vice chairman – Anarock Group: “The exemption varies from 1-2 per cent across states, and may even vary within a particular state, based on the classification of regions as ‘urban’ and ‘rural’. For instance, Delhi, UP, Rajasthan, Punjab, and Haryana offer a relaxation in stamp duty for women buyers.”
Lower Interest Rates: Many banks, such as State Bank of India, ICICI Bank, and HDFC Bank offer discounted home loan rates to women borrowers as compared to men. This again varies across banks, with a difference of around 0.25 per cent. This essentially means a lower equated monthly instalment (EMI) for women borrowers. This is also applicable when a woman co-applies for the home loan.
Tax Deductions: To avail of certain tax benefits, women can also become the joint owner of a property along with her spouse. If she has a separate source of income, both can claim tax deductions individually if they opt for the old tax regime. Hence, under Section 80C of the Income-tax Act, 1961, each co-owner can claim a deduction on the principal payment of up to Rs 1.5 lakh. When it comes to interest payments, each co-owner can claim a deduction of up to Rs 2 lakh.
Monga says that due to their financial awareness and credit consciousness, women borrowers are also less likely to default on the home loan, and they also have better credit scores as compared to men. This enhances their home loan eligibility and opens up more loan repayment options, too.
Incidentally, home loan rates have been on the rise over the past one year with the Reserve Bank of India (RBI) increasing the repo rate by 250 basis points (bps) to 6.5 per cent from 4 per cent between
May 2022 and February 2023. As a result of this, home loan interest rates have gone up from 7 per cent to 9.5 per cent.
One bps equals 0.01 percentage point. The repo rate is the rate at which the RBI lends money to commercial banks and lending institutions.
As a result, borrowers are now either having to pay a higher EMI on their existing home loans or extend their home loan tenure.
LIC Housing Finance is offering home loans up to Rs 20 crore at 8.45 per cent for the salaried and professionals with credit score above 750. The rate of interest is higher for those with lower credit score, up to 9.65 per cent for loans in the Rs 2 crore to Rs 20 crore range for Cibil scores between 600 and 699.
SBI Home Loans is offering rates of 8.85 per cent to 9.05 per cent. Punjab National Bank is offering rates of 8.55-9.05 per cent, while HDFC is offering loans up to Rs 30 lakh at 9-9.5 per cent.