Home Loan Benefits for Women in India
With steady increase in women’s employment in India, their involvement in making their household’s financial decisions is also increasing. In an effort to encourage home ownership among women, banks and NBFC’s are also offering additional benefits on their home loan products like preferential interest rates, higher chances of loan approval, etc. Moreover, the number of women in home co-ownership is also increasing as adding women as co-applicant increases home loan affordability.
In this article, we will learn about the benefits that women in India can avail when they apply for home loan.
Preferential Interest Rates
With women having a better track record of repaying their loans, banks encourage women to invest in properties and to buy new homes. To take it ahead, many banks and HFC’s offer interest concession of 0.05% on home loan interest rates. The interest concession might appear to be negligible, but given the large size and long repayment tenure (usually up to 30 years) of home loan, it significantly reduces the overall interest cost. Moreover, the savings made on the total interest payout can be either invested or used for meeting other financial requirements.
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An example illustrating the total amount women can expect to save on preferential home loan rates.
| Particulars | Woman Borrowers | Other Borrowers |
| Loan Amount | Rs. 80 lakh | Rs. 80 lakh |
| Home Loan Interest Rate | 8.40% | 8.45% |
| Rate Difference | 0.05% | |
| Loan Tenure | 20 years | 20 years |
| Monthly Installment (EMI) | Rs. 68,920 | Rs. 69,173 |
| Total Interest Amount | Rs. 85,40,886 | Rs. 86,01,496 |
| Total Amount Payable | Rs. 1,65,40,886 | Rs. 1,66,01,496 |
| Savings on Interest Cost | Rs. 60,610 | |
As per the above example, the total amount saved by women home loan borrowers over other applicants is Rs. 60,610. Women can use this amount for their personal use or invest in Mutual Funds.
Union Bank of India Home Loan, Canara Bank Home Loan, Bank of Maharashtra Home Loan, Central Bank of India and Bank of India Home Loan are a few banks that claim to offer interest rate concession to women home loan borrowers. However, Bank of Maharashtra and Union Bank of India offer home loan interest rate concessions to women applicants having CIBIL score/credit score below 725 and 750, respectively. Similarly, Bank of India offers interest rate concession to women home loan applicants having CIBIL score below 675. Also note that women applicants having higher credit scores and applying with these three banks will get the same interest rates as offered to their male counterparts.
As the interest rates offered to home loan applicants can widely differ due to the differing credit risk assessment process followed by the lenders, female home loan applicants should compare the home loan offers from as many lenders as possible to avail the best home loan offer available on their credit score, monthly income, job profile, etc.
Home Loan Tax Benefits for Women’s
Irrespective of gender, the government offers tax benefits on home loans of up to Rs. 3.5 lakh under Income Tax Act, 1961. Under Section 80C of the Income Tax Act, women can claim tax deduction of up to Rs. 1.5 lakh on home loan repayment. And under Section 24(b) of the Income Tax Act, women can claim tax deduction of up to Rs. 2 lakh on home loan interest. These tax benefits become double when women apply for home loans jointly with their spouses or other blood relatives. However, the couple should ensure that both are co-owners of the property.
Getting a home loan requires long-term planning and comparison of interest rates, features and other benefits. Always check home loan eligibility to know the amount you qualify for and ways to improve the home loan eligibility. You can also use Paisabazaar home loan EMI calculator to calculate your home loan EMI and the total interest cost against different loan amounts, interest rates and loan tenures. Doing so will not only help you evaluate your home loan affordability but will also help you manage your taxes well in advance.
Increased Chances of Loan Approval
Lenders factor in the income, credit score and repayment capacity of the co-applicant(s) while determining the home loan eligibility of the primary applicant. The female co-applicants too would become equally liable for the loan repayment, which would reduce the credit risk for the lenders and thereby, increase the chances of home loan approval for the primary applicant as well. Hence, those unable to secure a home loan due to their low credit scores and insufficient income and/or repayment capacity can consider adding an earning female family member as a co-applicant. The combined income and repayment capacity of primary applicant and female co-applicant would also increase their eligibility for availing higher loan amount.
FAQs on Home Loan Benefits for Women
1. What are the eligibility criteria for home loan for women?
Ans. Banks and HFCs evaluate home loan applications of female loan applicants as well as other loan applicants based on the same parameters including their credit scores, age, income, location and features of the property, etc.
2. Can both husband and wife claim housing loan benefits?
Ans. Yes, both husband and wife can claim tax benefits on home loan, provided they are co-owners of the concerned property and have availed home loan jointly.
3. Who can be a co-applicant in a home loan for women?
Ans. Usually, lenders accept only close members of the family and/or blood relations as co-applicants. However, the blood-relationships eligible for becoming co-applicants varies across lenders. Some lenders also allow joint owners of the property to become co-applicants. Thus, prospective co-applicants should enquire with the lenders regarding the eligibility conditions set for becoming co-applicants.
4. What are the processing fees applicable on a home loan for women?
Ans. Lenders do not distinguish home loan processing fees and other loan charges on the basis of gender. Hence, the processing fee applicable on a home loan for women will be the same as that for other loan applicants. However, many banks and HFCs waive off or reduce their home loan processing fees during festive season or special campaign periods.
5. Is the EMI lower if the home loan applicant is a woman?
Ans. Many lenders offer interest rate concessions of 0.5% to their women home loan borrowers, leading to lower EMIs for female home loan applicants.