4 Ways Women Can Benefit from Home Loans
With financial independence coming to women, an increasing number of women are now understanding the importance of owning a property and how this step can be a vital aspect of financial planning. Now, many women are applying for a home loan to fulfil the dream of owning a house. Banks and other lending institutions are betting on women customers to expand their home loan portfolio. To lure them, lenders are offering customised home loan schemes, lower processing fees and other discounts to women.
Some of the other factors that are contributing to the surge in the number of women home loan borrowers include lower home loan interest rates, tax benefits and lower stamp duty. Let us understand in detail how women would benefit from availing home loans from either banks or Non-Banking Financial Companies (NBFCs).
1. Save on Home Loan Interest
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 lending institutions offer a special concession of 0.05% to 1.00% on home loan interest rates.
Comparing Home Loan Interest Rates offered to Women & Others
|Home Loan by Various Lenders||Home Loan Interest Rates (p.a.)||Rate Difference|
|For Women||For Others|
|SBI Home Loan||6.95% – 8.00%||7.00% – 8.05%||0.05%|
|HDFC Home Loan||6.90% – 7.60%||6.95% – 7.65%||0.05%|
|PNB Housing Loan||6.80% – 7.70%||6.95% – 7.75%||0.15%|
|Canara Bank Home Loan||6.90% – 8.85%||6.95% – 8.90%||0.05%|
Note: The home loan interest rates in the table are subject to change without prior information.
The difference in the rate mentioned above might appear to be negligible, but it plays a big role in significantly reducing the monthly interest payment liability. Also, the money saved is money made which can be used for investment or for meeting other financial requirements.
An example illustrating the amount women expect to save on lower home loan rates.
|Particulars||Woman Borrowers||Other Borrowers|
|Loan Amount||Rs. 80 lakh||Rs. 80 lakh|
|Home Loan Interest Rate||8.30%||8.35%|
|Loan Tenure||20 years||20 years|
|Monthly Instalment||Rs. 68,417||Rs. 68,668|
|Total Principal Amount||Rs. 80 lakh||Rs. 80 lakh|
|Total Interest Amount||Rs. 84,19,970||Rs. 84,80,376|
|Total Amount Payable||Rs. 1,64,19,970||Rs. 1,64,80,376|
|Amt. Saved on Interest||Rs. 60,406|
As per the above example, the total amount saved by women home loan borrowers over other applicants is Rs. 60,406. Women can use this amount for their personal use or invest in Mutual Funds.
2. Lower Stamp Duty Charges for Women
Stamp duty is a compulsory tax that the state government imposes on the property during its sale or transfer. The rate varies from one state to another. Some of the factors on which the stamp duty rate depends are the status of the property, location of the property, type of property and usage of the property. The stamp duty charges usually vary from 4% to 10% of the property cost and since it forms a part of the property cost, even a small concession on the rate can make a huge difference in the property cost.
Many state governments offer a concession on stamp duty if the property is registered in the name of a woman, be it solo or joint ownership. The difference in the charges usually ranges from 1% to 2%, thus, helping to save a substantial amount while purchasing a house. Here are the rates for different states.
|States||Stamp Duty Charges for Men||Stamp Duty Charges for Women|
|Delhi||6% of the consideration amt. or the circle rate of the property applicable in the area, whichever is higher||4% of the consideration amt. or the circle rate of the property applicable in the area, whichever is higher|
|Rajasthan||5% of the market value||Female SC/ST/BPL: 3% of the market value|
Female other than SC/ST/BPL: 4% of the market value
|Haryana||In Rural Areas: 5%|
In Urban Areas: 7% (including 2% Municipality duty)
|In Rural Areas: 3%|
In Urban Areas: 5% (including 2% Municipality duty)
3. Enjoy Home Loan Tax Benefits
All taxpaying women borrowers are eligible to claim home loan tax deductions of up to Rs. 3.5 lakh. Under Section 80C of the Income Tax Act, 1961, borrowers 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, 1961, borrowers can claim tax deduction of up to Rs. 2 lakh on home loan interest. In addition, there are other additional tax deductions that women can claim. Here are the details.
|Sections||Tax Deductions On||Deduction Limit||Highlights|
|80C||Principal Paid||Up to Rs. 1.5 lakh|
|80C||Stamp Duty||Rs. 1.5 lakh||Can be claimed only in the year in which these expenses are incurred|
|24(b)||Interest Paid||Up to Rs. 2 lakh|
|80EEA||Interest Paid||Up to Rs. 1.5 lakh|
The above home loan tax benefits can be availed by women even on applying for a home loan jointly with their husbands or other eligible co-applicants. In fact, opting for joint home loans can increase the overall tax benefits. For instance, if a couple has applied for a home loan jointly, he/she can claim tax deduction of Rs. 1.5 lakh each on the principal paid and the interest paid under Sections 80C and 24(b) of the I-T Act, respectively. However, the couple should ensure that the conveyance deed/ sale deed has the names of both the applicants as the owners of the property.
4. PMAY Benefits for Women
Women can avail Pradhan Mantri Awas Yojana – Credit Linked Subsidy (PMAY-CLSS) to fulfil their dreams of homeownership. The government scheme aims to provide “Housing for all” by 2022 through different initiatives, including the Credit Linked Subsidy Scheme. Under CLSS, the government offers a subsidy of up to Rs. 2.67 lakh to eligible applicants on home loan interest rates. The subsidy amount is given upfront on the principal outstanding, thus lowering the interest amount. The benefits under PMAY-CLSS are provided according to the annual income of the family categorised as below:
|Income Groups||Eligible Family Income|
|Economically Weaker Section (EWS)||Up to Rs. 3 lakh|
|Low Income Group (LIG)||Between Rs. 3 lakh and Rs. 6 lakh|
|Middle-Income Group 1 (MIG-I)||Between Rs. 6 lakh and Rs. 12 lakh|
|Middle-Income Group 2 (MIG-II)||Between Rs. 12 lakh and Rs. 18 lakh|
Also Check: Pradhan Mantri Awas Yojana Eligibility Criteria
Benefits for Women Under PMAY
To encourage home ownership for women residing in urban as well as rural areas, the government provided the following benefits under its PMAY scheme. As per the guidelines of PMAY:
- It is necessary for a family to have at least one woman member registered as the owner of a new house, irrespective of the fact whether she is buying the property
- Senior citizens, including elderly women, would get ground floor accommodation for their convenience
Other PMAY Benefits Enjoyed by Women and Men
|Particulars||EWS||LIG||MIG – 1||MIG – 2|
|Annual household income||Up to Rs. 3 lakh||Rs. 3 – 6 lakh||Rs. 6 – 12 lakh||Rs. 12 – 18 lakh|
|Subsidy % on home loan interest rate||6.5% p.a.||6.5% p.a.||4% p.a.||3% p.a.|
|Max. loan amount for subsidy||Rs. 6 lakh||Rs. 6 lakh||Rs. 9 lakh||Rs. 12 lakh|
|Max. home loan tenor on which subsidy will be calculated||20 yrs||20 yrs||20 yrs||20 yrs|
|Amount of subsidised interest (Maximum)||Rs. 2.67 lakh||Rs. 2.67 lakh||Rs. 2.35 lakh||Rs. 2.30 lakh|
|Max. property carpet area||30 sq.m.||60 sq.m.||160 sq.m.||200 sq.m.|
|Home loan sanction date for scheme applicability (on or after)||01.01.2017||01.01.2017||01.01.2017||01.01.2017|
Also Read: How to Apply for PMAY Scheme
Getting a home loan requires long-term planning and comparison of interest rates. Always check home loan eligibility to know the amount you qualify for and ways to improve the eligibility. You can also calculate home loan EMI through EMI Calculator.