As a woman, getting a home loan with a co-borrower to purchase your dream house has benefits manifold. Yes! The central government and financial institutions are taking many steps to incentivise women to fulfil their dream of buying a house.
So, let’s look at the various advantages available to a woman primary borrower.
Lower interest rates
To encourage women homeownership, lenders typically offer more competitive home loan interest rates when women avail of housing loans as primary borrowers. Even though the decrease in interest rate may only be 0.05%-1.00%, it substantially lowers your interest outgo and your EMIs, which result in long-term savings.
Lowered interest amount
Besides getting attractive home loan rates, as a primary borrower, you can reduce your interest payable. How? When a woman co-owns a property, lenders calculate the housing loan interest using the daily reducing balance method.
Here, if you prepay a large sum partially, your principal amount gets reduced daily. This means you pay a relatively smaller interest amount.
Moreover, some lending institutions levy no part prepayment or foreclosing charges on women borrowers.
Another benefit of taking a loan as a primary borrower is the tax deductions on the loan repayment. Collect benefits of up to Rs. 1.5 lakhs on the principal sum as per Section 80C of ITA. Besides that, according to Section 24 of ITA, you receive deductions worth Rs. 2 lakhs on interest payments.
Also, if a married couple where both individuals have an independent income source co-own a property, they can maximise their tax subsidy up to Rs. 3 lakhs on the principal and Rs. 4 lakhs on the interest amount. They can both claim tax savings on their earnings. However, the deductions depend on whether the two co-borrowers own the property.
Flexible eligibility criteria
Thanks to the government initiative of ‘Housing for All’, more women are applying for affordable home loans as primary borrowers. Similarly, lending institutions set easy-to-fulfil eligibility norms to attract more women borrowers.
Moreover, if you apply for a joint loan, you can enjoy high loan amounts, as the lender assesses the combined income and repayment history of both the borrowers. This, in turn, increases your home loan eligibility.
Reduced stamp duty
Stamp duty charges are the tax amount paid on the purchase of a property. If the property is registered under the woman’s name, state governments extend 1-2% concession on the stamp duty charges. Here, even the slightest amount can bring down the total cost of the property significantly.
For instance, as a primary woman borrower, you can save Rs. 40,000 – Rs. 80,000 on stamp duty charges for a property costing Rs. 40 lakhs.
Considering the host of benefits mentioned above, if you are a woman looking for housing finance, now is the right time to apply. Use a home loan EMI calculator to determine potential EMIs and interest outgo for different interest rates and loan tenures. After evaluation, compare lenders to make an informed choice.