Women in India have finally stepped out from the shadows of patriarchy and are actively pursuing their dreams to make them a reality by becoming financially stable and independent. Since the beginning, women have always been the decision makers when it came to running the house and managing finances. But now they are also taking part in choosing and buying a property which was mostly done by the male members of the family. The real estate market is witnessing growth as far as women home buyers are concerned in the country. A recent study by Economic Times revealed that nearly 42% of women prefer real estate as an investment asset class, 30% chose fixed deposits and surprisingly only 17% were interested in gold.
As education and career take women away from their hometowns, property investment becomes a way of building long term stability for themselves. This trend is largely visible in metropolitan cities of Delhi, Mumbai, Bangalore, Kolkata and Chennai as well as Tier II cities such as Jaipur, Chandigarh, Lucknow, Raipur, and Mysore. According to a Track2Realty report, 32% of buyers across the country are single women who contribute to decision-making in about 74% of all real-estate purchases. Single women home buyers prefer cities like Bengaluru, Mumbai and Hyderabad because of reasons like safety, education and job opportunities and ample recreational joints and active nightlife. Real estate developers and home loan lenders have realised the potential of this segment and have come up with various offers and incentives to benefit and encourage female home buyers which will also eventually give a boost to the real estate industry.
Buying a property or taking a home loan in the name of a female family member like wife, sister or mother has the following benefits:
Increased home loan eligibility
Majority homes in India are financed through home loans because they are an effective and practical way to buy one’s dream house. But before financing your property, banks and NBFCs evaluate the home loan seeker’s loan eligibility which primarily depends on the salary. Co-owning a house with one’s wife helps increase the loan amount, as in this case both applicant’s incomes are taken into consideration.
Home loans at a lower rate
A number of leading banks and NBFCs in India offer home loans with concessional interest rates to women, besides various lucrative schemes, offers, and initiatives. This encourages women entrepreneurs, executives, and even homemakers to take a home-buying decision. As women are generally perceived to be more punctual and sincere in paying back loans and default less on making payments, thus banks also prefer giving loans to women. ‘Her Ghar’ scheme by SBI has waived off the processing fee for women home loan applicants. ‘Women Power’ by HDFC, and Mahila Awas loan are some other schemes which benefit women who are seeking home loans. An important point to note is that banks or HFCs offer discounted rates only if the woman is the solo or first co-applicant.
The prevailing home loan interest rates (floating) for women borrowers vs others are as follows:
|Bank||Interest rate for Women borrowers (per cent, per annum)||Interest rate for others (per cent, per annum)|
|HDFC Ltd||8.7- 9.3||8.75- 9.35|
Note: Rate as on March 27, 2019 (For loan amount < Rs one crore)
Partial waiver on stamp duty
In many Indian States, stamp duty for women homebuyers is comparatively lesser than those applicable for men. Rajasthan offers a 1% reduction in stamp duty for women and there is a 2% reduction in the stamp duty payable in Delhi and Haryana. This is irrespective of the fact whether the woman is a sole or joint owner of the property. There is a lower stamp duty charge even if the property is given to the female family member as a gift. For instance, in Jaipur, Rajasthan if you buy a flat for Rs 1 crore, the stamp duty for a male buyer would be Rs 6 lakh. Whereas, for a man and woman as joint owners it would be Rs 5 lakh and for a woman buyer, it would be Rs 4 lakh. Delhi government charges stamp duty of 4 percent from women compared with 6 percent for men and 5 percent for a man and woman as joint owners.
Stamp duty charges for Women Vs Men –
|State||For men||For women|
|Jharkhand||<1%||No stamp duty charges, paid one time for the first property|
|West Bengal||5% in rural 6% in urban (Plus 1% if property cost is >Rs 40 lakhs)||Same|
|UP||7%||Rebate of Rs 10,000 on overall charges|
Tax benefits on Home loan
Both men and women are entitled to a tax deduction on interest paid up to Rs 2 lakh on loan availed for purchase and construction of homes. If the property is owned jointly by a married couple and the wife is earning then both of them can claim tax deductions separately. Under the newly implemented 80EEA Act, if a house is bought in the financial year of April 2019-March 2020 under Rs. 45 lacs, additional deduction of Rs. 1.5 lacs can be availed.
Benefits under PMAY
Under the Pradhan Mantri Awas Yojana (PMAY), women have been kept under the preferred class of homebuyers. Even an unmarried girl can apply for a PMAY subsidy or a Home Loan as the program doesn’t discriminate on the basis of gender or marital status. PMAY guidelines make it mandatory to have at least one female family member registered as the owner of the house. In case where a woman holds the ownership of the house, the Govt. provides subsidy up to a maximum of Rs 2.67 lakh.
A female co-applicant is not mandatory while applying for a home loan under PMAY in the MIG 1 or MIG 2 category. The same applies on home loan under PMAY availed by applicants from EWS and the LIG category. But women must be co-owner of the property being bought using the PMAY home loan in case of EWS and LIG category applicants. This rule is applicable only for newly purchased houses under the scheme and not for houses that have been constructed on an existing piece of land or for repairs & renovation work of an existing house.
Rent on Property
While renting out their property, both men and women are allowed to deduct the interest paid on the loan against the net rental value, which is over and above the 30% standard deduction available on rental income.
Secure financial cover
Buying a house in a female’s name helps in securing the financial assets too. In case an individual incurs loss or debt in business, the house registered in the name of the wife cannot be claimed by government officials or creditors to cover the loss, provided that the wife is not a co-owner or guarantor in any loan availed by her spouse.
Ease up succession issues
A couple has equal succession rights in case they co-own a house or property. So in case of a partner’s death, the other partner can claim his/her rights on the property. There are no legal disputes with other family members and one saves money on mutation charges.
While buying a house in the name of the wife, one must always remember that:
She should have a regular source of income; otherwise, the property will be considered as the husband’s assets.
Property in the name of wife is not benami if bought out of a known source of income.
If the couple co-owns a property, the rental income generated from such property will attract tax from both the owners separately.
A co-applicant in a home loan is an individual who has an equal responsibility in paying the loan’s EMIs just like the main borrower. It is not necessary that a co-borrower must be a co-owner but if there is any dispute on the property then that individual will also be held accountable. Only a blood relative or an immediate family member can be a co-applicant for a home loan. Having a creditworthy co-applicant for a home loan is beneficial as it increases the chances of getting the loan approved with higher loan quantum and in some cases the co-applicant may also share the loan burden.
The following combinations for co-applicants are accepted:
The biggest advantage of buying a home as a single woman is the sense of security, stability and ownership one gets from having one’s own place. It’s a prudent long term investment which benefits the future generations as well. When one has decided to settle in a particular location, then its better to buy than pay exorbitant rents every month. Single women who have migrated to bigger cities tend to be thorough in their research and base their property purchase on factors such as safety and accessibility. According to thehindu.com, the average size of an apartment women prefer ranges from 500 to 800 sq.ft. (in metros) as they often attach greater importance to security rather than the size of the home. Other factors that influence their purchase decision are apartments with multi-purpose spaces, entertainment and fitness facilities in the vicinity, proximity to railway stations, airport, and taxi stands.
The cons of being a women home buyer is the gender discrimination one has to face. It is assumed that women can’t grasp the technical and financial aspects of real estate deals which couldn’t be further from the truth. Real estate is predominantly a male zone and they can get patronizing at times. Single women also have to face harsh judgements from society in general who refuse to allot property to them. In case of a home loan, the probability of a bank insisting on a single woman being asked to bring in a co-applicant is a lot higher than a married one. Many banks and housing finance companies sell home loan and other financial products to women by offering special rates and concessions. But sometimes the staff isn’t equipped and trained to handle the unique queries of single women. Buying a house is a financially heavy and risky investment and handling it alone can be quite a daunting and stressful task.
Home Loan Tips For Single Working Women
The first step in buying a house is factoring in the affordability. Ideally, the home loan EMI should not exceed more than 35%-40% of the net salary. Banks typically sanction up to 80% of the cost of the house; 90% in case of loan below 25 Lacs. But, banks don’t finance stamp duty and registration charges and hence one should have enough finances to sort out additional expenses which have been mentioned below:
2. Saving for Down Payment
Saving 20,000 on a monthly basis for 5 years in a SIP offering a return of 10% leads to savings of around 15.61 Lakhs. Saving a similar sum in a RD in a bank @ 7.5% will yield 14.60 Lakhs. These savings can be used as margin money and to handle the additional expenses. It can not be stressed enough that before one plans to buy a house one must always build a stable and secure financial portfolio. For instance, if someone wants to invest in a Ashiana property worth Rs. 36 lacs, she would only have to pay Rs. 6-7 lacs as down payment.
3. Building Credit Score
Credit Score is pivotal regarding any interaction with banks. It is almost like your character certificate so it has to be impeccable. Everyone has debit cards and credit cards attached to their bank accounts these days so any defaults on payments will negatively impact the credit score. One should regularly pay the due amounts and within a year or two one will develop a good credit history. Specific NBFCs also give EMI cards based on income and repaying capacity. Timely repayment of EMIs will build a solid credit score.
4. Take Advantage of the Government Benefits
Govt. of India in its endeavour to encourage and empower female buyers, has announced various schemes which directly benefit women looking to buy homes or availing home loans.
5. Explore Women-friendly Schemes
Banks have realised the potential of female buyers and hence have developed Home Loan products exclusively for them. As an aware buyer, one should gather as much information about the products available through various banks because that will help in comparing and choosing the most suitable one. The products offer relaxation in eligibility criteria and interest rates which are less by about 0.15% in comparison to regular rates. The difference might appear negligible but the savings can be more than 1.25 Lacs over a 30-year period. The Credit-Linked Subsidy Scheme (CLSS) allows interest subsidy from 2.35 Lakhs to 2.67 Lakhs depending on the economic category. Such programs aims to benefit women beneficiaries especially single working women and widows.
6. Prepare for Emergencies
One should always have a Plan B ready in case of contingencies like layoffs, accidents, major illness etc. Have a contingency fund that can handle EMI for a period of at least six to eight months to avoid unnecessary stress and problems. Loan insurance products can also be explored to take care of emergencies.
The world is her oyster. There’s literally nothing a woman can’t do. She either finds a way or makes a new one. Encouraging female home buyers and making the entire process hassle free for them at the ground level will motivate other women to follow suit and take more constructive decisions. However, the current scenario in India may not be as rosy as it seems but with more women taking charge, even the real estate industry which has predominantly been a male dominated territory will see positive changes in the near future. The number of women joining the real estate workforce is also another positive indication of good times to come. Change will come only with time, acceptance and encouragement. And it will come for sure as it is the only constant thing in life.
Ashiana, Ashiana Housing build homes. Homes surrounded by vast green spaces and fresh breeze. Homes cocooned in secured gated complexes. Homes where futures are forged and there are opportunities to grow. And Homes in environments brimming with healthy activity, trust and respect. At heart, we build communities with care.
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