Meet Paridhi. She’s always worked behind the scenes for a TV channel in a contractual role. After years of temporary positions, she finally landed a stable job with a multinational company, which came with better financial security and benefits. Paridhi’s long-held dream was to buy a home for her parents, but getting a home loan on a contractual salary was challenging. Once she secured her new position, she decided it was time to apply for a home loan, convinced that the steady job would help her get favourable terms. With determination and careful planning, Paridhi applied for a loan, and soon enough, she was the proud owner of a 2 BHK flat in the city. She knew that purchasing the house in her own name would offer her some exclusive benefits, so she made it happen.
Women across the country are growing financially independent and increasingly taking charge of major life decisions like buying a home. Home loan providers in India recognise this trend, introducing unique schemes and incentives tailored to women buyers, making homeownership more accessible and rewarding. Here’s how women can benefit from taking home loans in India, with insights from Chartered Accountant Abhay Asknani.
Top Home Loan Benefits for Women in India
1. Women Benefit As Co-Borrowers
Women can apply for home loans either individually or as co-borrowers with their spouse. When both spouses apply together, the combined income is taken into account, increasing the total loan eligibility and potentially allowing for a higher loan amount. This means more flexibility in selecting a home that suits the family’s needs.
Chartered Accountant Abhay Asknani explains, ’As a co-borrower, women can help enhance loan eligibility since the bank considers combined income, which often results in more borrowing power. Additionally, both parties can claim individual tax benefits on home loan repayments under Sections 80C and 24(b), with a maximum deduction of ₹1.5 lakh on principal and ₹2 lakh on interest payments, making it a mutually beneficial arrangement.’
2. Lower Stamp Duty Rates
Many state governments in India offer reduced stamp duty rates on properties registered in a woman’s name to encourage women’s homeownership. These savings can range from 1-2 per cent, which could mean significant financial relief for buyers.
According to Asknani, ’Stamp duty reductions can result in substantial savings, especially for properties in the higher price brackets. For example, on an ₹80 lakh property, a 1 per cent reduction could save around ₹80,000 – savings that can be redirected towards home improvements or other expenses.’
3. Higher Chances Of Loan Approval
Lenders are more inclined to approve loans when a woman is listed as the primary applicant or co-applicant. This stems from financial institutions' recognition of women's generally disciplined financial habits, tendency to save, and lower default rates. Women are often seen as reliable borrowers, making it easier for them to secure loans at favourable terms.
’Data shows that women borrowers tend to have lower default rates, which is why financial institutions are keen on offering competitive loan packages to them. This translates into higher approval rates and, often, more flexible loan terms,’ explains Asknani.
4. Lower Interest Rates
Many lenders offer slightly reduced interest rates for women home loan applicants, typically about 0.05 per cent to 0.1 per cent lower than the standard rate. Although this may seem small, the savings on overall interest payments add up over the life of the loan, making it more affordable for women to repay the loan in full.
’A marginally lower interest rate can reduce overall interest costs, making it easier for women to achieve homeownership without excessive financial strain. For instance, a 0.1 per cent reduction on a 20-year loan could yield savings that ease the monthly EMI burden,’ Asknani adds.
5. Tax Benefits
If a woman applies for a home loan jointly with her spouse, they can both claim tax deductions. Under Sections 80C and 24(b), women co-owners can avail of deductions on both principal and interest payments, reducing their overall tax liability. First-time homebuyers may also claim deductions under Sections 80EE and 80EEA, though these are subject to specific conditions.
’Joint ownership not only boosts loan eligibility but also allows each co-owner to independently claim tax deductions, which can be instrumental in reducing taxable income. It’s a smart approach for first-time buyers,’ says Asknani.
6. Benefit Under Pradhan Mantri Awas Yojana (PMAY)
The PMAY is a government scheme aimed at providing affordable housing. The scheme mandates that properties purchased under this scheme be registered in the name of at least one woman in the family. This ensures that women benefit from subsidised interest rates, making homeownership more affordable and accessible to first-time women homebuyers.
’The Pradhan Mantri Awas Yojana offers subsidised interest rates and is a valuable resource for women buyers. With registration requirements that prioritise women, the scheme actively promotes homeownership among women,’ Asknani notes.
Making Informed Choices: How Women Can Leverage These Benefits
Understanding these benefits can help women make informed choices when applying for a home loan. Here are a few steps to maximise these advantages:
• Explore Multiple Lenders: Compare offers from different banks to find the lowest interest rates and best terms for women applicants.
• Choose The Right Co-Borrower: Applying with a co-borrower can improve eligibility and access to tax benefits.
• Utilise Online Tools: Use tools like home loan EMI calculators to plan for repayments and manage finances effectively.
• Consider State-Specific Benefits: Investigate if your state offers additional incentives, like reduced stamp duty or registration fees for women buyers.
Home loans are an empowering tool for women, supporting them in securing property and shaping their financial futures. Whether it's fulfilling a lifelong dream or investing for the family’s well-being, a home loan can be the pathway to both security and achievement. For women like Paridhi, owning a home represents not only a cherished goal achieved, but also the satisfaction of contributing significantly to family stability and prosperity.