Why should women be the primary or co-applicants when getting a home loan?
Lower interest rates on a home loan
Banks typically provide female borrowers with mortgages at rates 50 to 100 basis points lower than those offered to men. This will make it easier for women to repay the loan. Although the interest subsidy is only 0.1% lower, it has a substantial effect on IMEs and facilitates long-term repayment.
If a woman took out a home loan from the State Bank of India (SBI), today she will only have to pay 6.80% interest on a loan up to Rs 30 lakhs. Men, on the other hand, have a 7% on the loan. Even if the difference does not appear to be significant, any savings are better than none.
Suppose, for example, that a male mortgage seeker paying 7% interest on a loan of Rs 31 lakhs for 20 years, would ultimately pay around Rs 57.68,224. In the case of a female mortgage borrower, the loan is valued at 6.8%, the overall loan liability would be Rs 56.79,246.
Reduced stamp costs
When a property is registered in a woman’s name, most Indian states charge a lower stamp duty. These are the fees the buyer must pay in order for the property to be registered with the government. Stamp duty varies by state. On Women’s Day, the governments of Karnataka and Maharashtra reduced stamp duties for women borrowers.
Extended occupancy time
Women who apply for a home loan have a longer repayment period of up to 25 years. This allows women to lower their monthly EMI and reduce their financial burden. Women can even pay off their loans sooner without having to worry about foreclosure.
Stamp duties in major Indian states
|State||Stamp duty rate for men||Stamp duty rate for women|
6% in rural areas
8% in urban areas
4% in rural areas
6% in urban areas
|Uttar pradesh||7%||Discount of Rs 10,000 on overall charges|
Tax benefits for women
In addition, women benefit from tax breaks on the repayment of their mortgage. The maximum tax deduction on the principal sum is Rs 1.5 lakh and the maximum tax deduction on the repayment of interest is Rs 2 lakh. Husband and wife will claim tax deductions of up to Rs 3 lakh if they are co-owners of the property and have separate sources of income. Both partners will be entitled to claim tax deductions on their income under Article 80C, Article 24 and Articles 80EE and 80EEA as a result of this.
Advantage of government policies
The government has made it compulsory to register goods purchased under the Pradhan Mantri Awas Yojana (PMAY) in the name of at least one woman in the household. Women who take out a home loan under the flagship Credit-Linked Subsidy Program (CLSS) benefit from interest rate reductions. On home loans up to Rs 6 lakhs, women borrowers from the economically weaker segment and from the low income community (LIG) can get an interest subsidy of 6.5%.