In India, there has been a steady increase in the number of women who are employed and involved in making household financial decisions. To support this trend, many banks and non-banking financial companies (NBFCs) are offering additional benefits on their home loan products, such as better interest rates and customized plans, specifically aimed at women. In addition, an increasing number of women are opting for home co-ownership as it makes home loans more affordable.
This article aims to educate women in India about the benefits they can receive when they apply for a home loan.
What are Preferential Interest Rates for Women in Home Loans?
To support women who want to invest in properties and buy homes, many banks and housing finance companies (HFCs) offer preferential interest rates on home loans. These rates are usually lower by 0.05% to 1% compared to regular interest rates. Although this may seem like a small amount, the impact of this concession can be significant over the long repayment period of a home loan, which is usually up to 30 years. The savings made on interest can then be used for other financial needs or invested. Banks encourage women to take advantage of these rates because they have a better track record of repaying their loans.
Imagine both a woman borrower and a general borrower want to take a loan of ₹10,00,000 for 20 years. The interest rate for the woman borrower is 5.50% while the interest rate for the general borrower is 5.55%. This means the woman borrower gets a slightly lower interest rate, which results in a difference of 0.05% in the interest cost.
The monthly installment (EMI) for the woman borrower comes out to be ₹47,365 while for the general borrower it is ₹47,498. Over the course of 20 years, the total interest amount paid by the woman borrower would be ₹5,48,28,937 while the general borrower would pay ₹5,52,20,854. This means the woman borrower saves a total of ₹3,91,917 in interest costs.
If you are a woman looking to take out a home loan, you may be eligible for a lower interest rate. This means you can end up paying less in interest over the course of your loan. Banks and Housing Finance Companies (HFCs) like HDFC, Union Bank of India, State Bank of India, Indian Bank, Punjab and Sind Bank, Central Bank of India, and Bank of India, offer preferential interest rates to women borrowers.
It’s important to keep in mind that interest rates can vary greatly from lender to lender, depending on factors such as your credit score, monthly income, and job profile. That’s why it’s a good idea to compare offers from multiple lenders to find the best deal for you.
The money you save on interest can then be used for personal expenses or invested in mutual funds to grow your savings.
What Are the Tax Benefits Available for Women Home Loan Borrowers in India?
If you’re considering a home loan, it’s important to know about the tax benefits that are available. Regardless of your gender, the Indian government offers tax benefits of up to ₹3.5 lakh under the Income Tax Act, 1961. For women, there are two specific sections of the act that offer tax deductions: Section 80C and Section 24(b).
Under Section 80C, women can claim a tax deduction of up to ₹1.5 lakh for the repayment of their home loan. And under Section 24(b), women can claim a tax deduction of up to ₹2 lakh for the interest paid on their home loan. If a woman takes out a home loan jointly with her spouse or another blood relative, these tax benefits can be doubled. However, both parties must be co-owners of the property.
How to Determine Your Home Loan Affordability and Plan Your Taxes with Refer Loan's Expert Assistance?
When considering a home loan, it’s important to take the time to research your options and make an informed decision. With Refer Loan, you can not only check your home loan eligibility and find ways to improve it, but also take advantage of our expert assistance. Our home loan specialists can help you find the interest rate and loan terms that best fit your budget and financial situation.
Additionally, our home loan EMI calculator can give you a clearer picture of your monthly payments and total interest cost based on different loan amounts, interest rates, and loan tenures. This will help you determine your affordability and plan your taxes accordingly, so that you can make the most of your home loan experience.