Inequality in income has never stopped women from becoming the fastest-growing segment of the home buying market. With female workers in India still earning roughly 80% of what men earn for the same job, they realize the importance to save and invest with a great purpose. The gained traction of having an owned safe nest when dealing with unpredicted circumstances has resurfaced, especially after Covid-19. Women now have realised the importance of purchasing an asset for their security and as a sound investment.
With this courageous mindset and bold attitude, there has been a gradual increase in the number of women as homebuyers. The aspiring working professionals, single or married are now converting the desire to own a dream house into a reality by evaluating suitable options, especially in metro locations.
As women across India diversify their investments and enjoy various exclusive benefits that are offered to them, there are still various challenges that women face particularly when financing a home loan.
Here are certain tips that will help them get a secure and profitable deal:
For any borrower, home loan repayment is probably the biggest expense. So, before you make any emotional decision while buying a house, you must assess your financial position. The first thing you can do is to know how much money you have saved to make the down-payment? As typically, 20% is the value that has to be paid upfront to lenders.
The next important thing is to know how much EMI you can afford with no compromise to your current expenses. For instance, a woman who earns Rs 20 lacs a year, makes a 20% down payment on a Rs 1 crore house that carries a home loan for the rest at 7.2%.
That means she would have a monthly payment of around Rs 78,000 which is almost half of the gross income. And the payment amount covers only the principal and interest. The buyer would also have other expenses like household expenses, homeowner’s insurance, etc.
It is always recommended to buy a house that you can afford so that you can save for your long-term goals such as retirement or travel goals.
Most of the time people just grab an offer by looking at the interest rates, but it is important to know that interest rate is not the only criteria that a woman should decide on. It is equally important to do extensive research on the options available in the market and compare them.
The research should be a basis on three crucial factors which are the processing fee, down payment, EMIs, and the repayment tenure. Based on these factors, you will be able to decide on a home lender that best suits you. Moreover, even if you have got a suitable lender, it is suggested to monitor the market at regular intervals to check if any other bank is offering loans at any better rates.
A credit score is a number between 300-900 that is used to depict the creditworthiness of a borrower. It is given a lot of importance by banks and financial institutions and is based on credit history, assets, repayment level, debt position, and other factors.
It is one of the most reliable ways to evaluate the probability that an individual will repay the home loan on time. A credit score of over 750 and above is usually considered healthy. So, before any woman applies for a home loan online, it is important to build a solid credit score.
A lot of financial institutions and banks offer discount facilities for women. This is done to encourage them to invest in properties and housing. Once you have decided on the house and the budget, it is good to research the areas you can save.
In almost all states, women can save a lot on stamp duties. For instance, in Delhi, the stamp duty payable by men is 6% whereas women pay only 4%. That means a woman can save almost Rs 2 lakh on a property worth Rs 1 crore. If there is a joint purchase by a husband and wife, the stamp duty is 5%. The same is true for other states such as Maharashtra, Himachal Pradesh (the percentage might vary), etc. Another benefit that a woman enjoys is the concession on the interest rate which is lower by 0.05% to 0.1%.
Even a slight discount on the interest rate can help a borrower with EMIs burden. Along with the ease of stamp duties and interest rates, women borrowers also enjoy exemptions on home loans under section 80C that is the opportunity to claim tax benefits of Rs 1.5 lacs on the principal amount.
A home loan is usually larger than any other loan. Therefore, women need to make use of such services instead of paying extra money on a sum that is borrowed. This can be done by exploring all the details and options that come before and after the home application.
(The writer is co-founder and CEO, BASIC Home Loan. Views expressed are personal)
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