My friend Anu, an architect in Bangalore, wanted to design and furnish her own house but she could never afford to buy one in the current economy – or so she thought. Despite having an existing education loan to pay off, she saw an amazing place and decided to pay EMIs instead of rents – after all, it was a safer decision now that she’d just gotten a raise. So, she took the plunge and decided to start the process of getting a home loan. Did you know that banks offer lower interest rates on home loans for women in 2021?
Lower rate of interest
Interest rates on home loans are lower for women borrowers when they are primary applicants. Banks charge low rate of interest to encourage more women to become owners and co-owners of property. It is noted that women have a better track record in repayment of loans and debts. Since Anu had her educational qualifications in place and had received a raise in salary, bank was ready to offer her lower rate of interest than the standard interest rates for women.
Higher loan eligibility
When women borrowers apply for a home loan with their spouse as a joint applicant, the married couple is eligible for higher loan amount. This coupled with a salary raise, gave Anu and her husband more flexibility in choose a home loan plan. Which means they could opt for the kind of house they want with all the amenities.
Savings on Income Tax
Anu can save on paying IT to the government since she can enjoy the benefit of tax deduction on home loan repayment. A maximum deduction of Rs.1.5 lakh and Rs.2 lakh is allowed on the home loan interest paid. Here’s an overview of tax deductions that women can claim.
|Income Tax Deductions on||IT deduction capped at||Condition|
|Principal amount repaid||Rs.1.5 lakh||The property purchased by availing the loan should not be sold within 5 years of possession. It should be a self-occupied property.|
|Interest paid||Rs.1.5 lakh||The primary woman applicant should be a first-time buyer. Stamp value of the property should not exceed Rs.45 lakh. Loan should be availed. between 1st April 2019 and 31st March 2020.|
|Interest paid||Rs.2 lakh||Construction of the house should be completed within 5 years from the time period – end of the financial year when the loan was availed.|
|Stamp duty||Rs.1.5 lakh||Claim can be made in the year when the expenses were incurred.|
PMAY encourages women to become property owners
Pradhan Mantri Awas Yojana (PMAY) Housing scheme that was introduced in 2015 has a mandatory condition for the female head of the family to be co-owner of the property. Households whose annual income is between Rs.3 lakh to Rs.6 lakh, single women and widows in the family are also extended the same benefits that a married woman has from PMAY.
Under Credit Linked Subsidy Scheme of PMAY, female applicants are entitled to receive a subsidy of Rs.2.67 lakh on home loan interest. The interest amount is lowered by the subsidy amount that is given upfront on the outstanding principal.
Conditions under which women applicants can benefit from PMAY
- The female applicant should either be the owner or co-owner of the house.
- Annual household income should fall between Rs.3 lakh to Rs.18 lakh.
- The female applicant should not be registered under any other housing scheme provided by the Central or State government of India.
Since Anu had all the cards in her favour and was backed by PMAY scheme, she availed it to get the most out of what the banks and government offered her.
Women are favored applicants
Banks offer better interest rates to women borrowers due to data studies indicating that women are better at managing finances on a regular basis than men in general. And considering that Anu’s salary wasn’t as high as her male counterparts, it seemed like a fair deal to her.
Longer repayment tenure
Female home loan applicants can opt for repayment tenure up to 25 years. This means Anu can take care of her other commitments with ease as the EMI amount is reduced further as the repayment tenure is longer. Also, no charges are made on foreclosing loan and making part prepayments. What more could Anu ask for? The loan regulatory authorities had taken care of all aspects of her finance, making it easy for repayment.
If you, like Anu, want to enjoy the perks of home loans for women, reach out to us and let us help you to get your dream home.