Adhil Shetty is CEO at Bankbazaar.com.
Home ownership has traditionally been a male bastion, but women are stepping up majorly. According to BankBazaar’s Moneymood 2019 data, the average home loan ticket size for women is Rs 27.57 lakh: 20 percent higher than men’s average home loan size of Rs 22.97 lakh. Also, a 2019 TransUnion CIBIL report shows that successful credit applications by women borrowers marked a 48 percent growth between 2015 and 2018. In comparison, male borrowers fared only at 35 percent growth.
These reports are indicative of an inspiring trend that many women are no longer immune to the aspirational wave and are in fact taking the lead in investing for theirs and their family’s future.
Let’s discuss some possible reasons that fueled this trend:
Change in mindset
Buying a house is perhaps the biggest financial decision in anyone’s life. And it’s promising that countless women are becoming principal stakeholders from being mere advisors when it comes to critical decision-making.
As more and more women continue to break the glass ceiling and achieve financial freedom, it’s obvious that they no longer want to play second fiddle, especially about something as important as buying a home.
Preferential interest rates for women borrowers
In order to attract more women borrowers, lenders offer discounts on home loan interest rates. These discounts vary from 0.05 percent to 0.1 percent, which can make a huge difference to the interest payable on home loans and lead to more savings. As a result, more couples are encouraged to take joint loans or loans where the woman is the primary borrower in order to avail the lower interest rate.
The State Bank of India, for example, reserves its lowest interest rates in all home loan categories for women. Its loans under Rs 30 lakh for salaried borrowers is priced at 8.70 percent for women compared to 8.75 percent for men. For non-salaried borrowers, the same loan is priced at 8.85 percent for women while 8.90 percent for men.
Convenience of co-borrowing
First-time home buyers often find it challenging to meet home loan eligibility criteria, but things can get way more convenient if a couple applies for a loan as co-borrowers. For example, assume someone with a monthly income of Rs 1 lakh wants to apply for a Rs 80 lakh home loan. Since home loan providers generally allow a maximum loan ticket size of 60 times the borrower’s monthly take-home pay, the person might find it difficult to get the desired loan amount (of Rs 80 lakh) on his or her own. Now if the same person were to apply for the loan with his or her spouse (who also makes, say, Rs 75,000 a month), they now can easily get their desired loan amount because banks will consider the combined income of both the co-borrowers to ascertain the loan eligibility.
As such, it’s not surprising that an increasing number of women are pitching in to expand the loan eligibility ambit of their family and partnering as an equal stakeholder to realise their common dream of buying a home.
The tax benefits
Another major advantage of jointly taking a home loan is the tax benefit u/s 80C and 24B that both the borrowers can claim within the prescribed limit. Meaning, co-borrowers, who are also co-owners of the property, can each claim tax deduction of up to Rs 1.5 lakh u/s 80C on principal repayment as long as the combined claim doesn’t exceed the total principal repaid during the year. Similarly, co-owners of self-occupied properties can further claim tax deductions of Rs 2 lakh each u/s 24B on home loan interest payment as long as the combined claim doesn’t exceed the total interest repaid during the year.
That being said, it will be worthwhile to reiterate that both the co-borrowers can take advantage of the tax deductions only when they’re co-owners and according to their share of ownership.
This is perhaps another reason why more men are seeing the merit in co-borrowing a home loan alongside their wives, something that’s also contributing towards a surge in the number of women borrowers.
Discount in stamp duty charges for women home buyers
Stamp duty charges form a significant component of the home buying cost. Some states and Union Territories like Haryana, Rajasthan, Punjab and Delhi offer a 1 percent-2 percent special discount on stamp duty charges to women home buyers. This, again, is a good step to encourage more women to invest in housing.
However, it must be noted that women should be the owner or co-owner of the property to avail this notable discount.
Subsidy support for first-time home buyers
First-time home buyers can also take advantage of up to Rs 2.35 lakh subsidy under the Central Government’s Pradhan Mantri Awas Yojana (PMAY) Credit Linked Subsidy Scheme (CLSS). This subsidy is also helping first-time home buyers -- both men and women -- as they dig out their savings to arrange the down payment fund.
The Indian realty sector is regaining momentum after the post-demonetisation slowdown. In fact, according to a study, home sales as expected to increase by 16 percent in 2019 with a spurt in demand for affordable housing projects, something that’s partly fueled by women-friendly loan schemes. The other contributing factors include subsidies for first-time home buyers under PMAY, regulatory transparency brought about by the Real Estate (Regulation and Development) Act, 2016, among others. All these factors are playing a crucial role in empowering women to take the lead in the race to buy their dream home.
The writer is CEO of Bankbazaar.com.
The thoughts and opinions shared here are of the author.
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