Is owning a house is still a dream for many Indian middle class families? As per a report in 2019, more than 50% Indians love in their own homes, while more than 30% Indians live in a rented home. Around 13% of the Indians live with their parents.
With subsidy schemes like Prime Minister Awas Yojana or PMAY, the dream of owning a house for a middle- or lower-income group has come more closer to reality. Building own home or applying ofr a home loan used to be a big thing for people in the past, but with these government schemes, it has become easier. With proper planning of finances through Top 5 Online Stock Market Courses in India,one could realise this dream.
So, the answer to this question whether owning a home is a dream for many, is still a yes. For women, what was a very tough job a decade ago, has now become simpler. This has led to increased applications for home loan from women rising day by day.
Such is the popularity that even banks, and financial institutions have come up with several home loan schemes curated for women. In this blog, let us cover a few of those benefits in detail.
Lower Interest rates:
The rate at which an amount is lent by a financial institution or loan provider for the purchase, construction or renovation of a home is a home loan interest rate. The greater is this interest rate, more difficult it is to pay it back. In India, standard home loan interest rates range from 8.75% to 9.40% p.a. But if a woman applies for such a loan, interest rates drop down even further because banks feel them as more credible and reliant. So nowadays couples prefer that the home loan is taken in the name of wife, to avail lower home loan interest rates. For individual women, getting a home loan has also become easier than what it was almost a decade ago.
Better Home Loan Eligibility
While the norms of home loan application and approval are different as well as more complex than other loans, there are home loan benefits for women too. These norms are dependent on a various number of factors, such as monthly income, monthly obligations, credit score, location, work experience and other factors. Thus, many might not be eligible for availing a home loan normally, unless opting for a government welfare scheme. Although these norms are much relaxed for women and the approval is also more. One could refer to home loan calculators for checking their eligibility.
Home Loan benefits for women also include the tax benefits. This is also a major reason for wives becoming a co-applicant in a home loan application of couples. This way both can claim deduction in taxes individually under section 80 C and Section 24 of the Income Tax Act, 1961. The couple can also avail tax deductions under Section 80EE and 80EEA, but there is a catch. This deduction is only applicable to only first-time house buyers.
Government Schemes and Subsidies:
One of the most popular and promoted schemes for owning your home through home loan is PMAY or Pradhan Mantri Awas Yojana. This scheme aims to provide affordable housing for the urban poor. With this scheme, applicants can receive interest subsidies on home loans. Individuals from economically weaker sections (EWS), low-income groups (LIG), and middle-income groups (MIG). Following is the classification of these sections:
|Middle Income Group I
|Rs 6 Lakh to 12 Lakh
|Middle Income Group II
|Rs 12 Lakh to 18 Lakh
|Lower Income Group
|Rs 3 Lakh to 6 Lakh
|Economically Weaker Section
|Upto Rs 3 Lakh
Apart from these categories, people belonging to SC, ST, and OBC categories and women belonging to EWS and LIG income groups are to be also eligible for the PMAY scheme.
Another Home Loan benefits for women is the mandatory requirement that property purchased under the PMAY scheme must be registered in the name of at least 1 woman in the family. Not only this, if a woman is applying for a home loan under this CLSS, she can avail of concessions on interest. This subsidy amount varies as per the income group of the applicant and can be up to 6.5% of the home loan amount. Home loan below Rs 50 Lakh availed for a tenure of 20 years will be eligible for the proposed scheme.
Following are the highlights of PMAY Scheme:
- Subsidized Interest Rate: Interest rates as low 6.50% p.a. on home loan for 20 years.
- Priority for Special Groups: Differently abled and senior citizens receive preferential ground floor allocations.
- Eco-Friendly Construction: Sustainable and environmentally conscious technologies utilized in building.
- Pan-India Coverage: Scheme spans 4041 statutory towns, with initial priority given to 500 Class I cities in 3 phases.
- Early Credit-Linked Subsidy: Implementation of the CLSS or credit-linked subsidy begins at the project’s inception, covering all statutory towns in India.
Apart from this central government scheme, there are various state government schemes too, aimed for affordable housing, providing subsidies as home loan benefits for women and easing home loan applications for women.
Lower Stamp Duties
While registering a home, the state government in India levies a legal tax in the form of a stamp duty. This stamp duty levied while purchasing a property and could be a costly expense additional to the purchase amount of the property. But as home loan benefits for women, such stamp duty is around 1% to 2% less. Some state governments also offer waivers on these stamp duties and registration fees in festive season too.
Longer Repayment Tenures
As home loan benefits for women, they can repay their home loan with ease up to 40 years. This way the EMI amount could be lower, reducing the financial burden. Also a few home loan providers levy no charge on making part-prepayments and foreclosure of the home loan which is another benefit in the list of home loan benefits for women.
With the current government policies, relaxation in norms and subsidies, owning a home is no longer as difficult as it was a decade ago. With several home loan benefits for women,you can get a home for your family, if you know how to leverage the power of compounding by investing the right way.