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Home loans 101: Benefits for women borrowers

India’s economic landscape has changed in the past few years. Among the many shifts that have taken place is the rise in the number of women who are now part of the nation’s workforce, and consequently, also in charge of their finances. As a result, property ownership among women has also seen an uptick over the last few years. A recent survey titled the Aspiration Index which was conducted by BankBazaar highlights this changing real estate trend. It notes that on average, more women have ongoing home compared to men.

With regard to home loans, there are several benefits that women borrowers can avail of as a primary or co-applicant for a home loan. These incentives can help borrowers save on their loan, as well as loan-related costs. Let’s look at some of the most important benefits that are available to women home loan borrowers.

Interest Rates

As an incentive to encourage home ownership among women, many banks and NBFCs offer concessional interest rates to not only women borrowers but also on loans where the woman is a co-applicant as well as the co-owner of the property. Compared to regular borrowers, the interest rates offered to women borrowers are typically 0.05 per cent to 0.1 per cent lower. The concessional rates that are offered may vary from lender to lender and are usually based on the applicant’s credit score. This lower rate translates to lower EMIs ad well as lower interest outgo, which can help maximise savings.

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Here are some leading banks offering reduced interest rates on home loans to women:

Bank Interest Rate – Regular Applicants Interest Rate – Women Applicants
Union Bank^ 9.20-9.55 9.15-9.50
Bank of India* 10.60-10.75 10.55-10.70
Central Bank 8.50-9.50 8.35-9.25
Canara Bank 8.60-11.25 8.55-11.20

Note: Data taken from respective bank’s website as on 15 Sep 2023; Data is not exhaustive and there could be more banks offering special home loan interest rate for the female applicants; *For applicant with CIBIL score below 675; ^for non-government/PSU employee with CIC score between 650 to 749

Lower stamp duty

Festive offer

Stamp duty is levied on the sale or purchase of property across India. It is calculated as a percentage usually ranging from 3% to 9% or above, of the property’s value. However, this duty varies from state to state across India and many states offer concessions on stamp duty to women home buyers.

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For instance, in Maharashtra, the stamp duty for men is 6% but 5% for women. Punjab offers a greater concession to women home buyers, charging them a 5% stamp duty, compared to 7% to men. Many other states like Haryana, Rajasthan, Odisha, and Uttarakhand also offer concessional stamp duty to women.

Tax benefits

Women applying for a home loan as primary or co-applicants can avail of tax benefits under various sections of the Income Tax Act. Under Sec 80C, borrowers can claim a maximum tax deduction of up to Rs.1.5 lakh on principal component of their home loan. Sec 24B offers a maximum tax deduction up to Rs.2 lakh, applicable on the interest component of a home loan taken for a fully constructed house.

Interest rate subsidies

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To further encourage home ownership among women, the government of India has announced various schemes that include interest subsidies. One such scheme is the Pradhan Mantri Awas Yojana (Urban) (PMAYU) which mandatorily requires the woman to be the owner or co-owner of the house, offering them a maximum interest subsidy up to Rs.Rs.2.67 lakh. Moreover, single or widowed women borrowers from Economically Weaker Sections (EWS) or Lower Income Group (LIG) are eligible for a subsidy of 6.5% on loans of up to Rs.6 lakh.

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Conclusion

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Having your own house brings about a great sense of financial security and peace of mind. In addition to the incentives listed above, lenders may also offer seasonal or event-specific deals on home loans for women borrowers. These deals may be for a limited time period and can further help buying a house more affordable.

Adhil Shetty is the CEO of BankBazaar.com

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