ARTICLES

The "hand that rocks the cradle" is all set to rule the world herself, and her contribution to the financial sector can be a liberating experience, especially applying for home loans. Courtesy, the special benefits banking and non-banking lenders provide when a woman wants to apply for a home loan as a co-applicant. 

While most home-loan plans prefer spouses, single women can also apply for home loans with some lenders. The latter can be a tedious task, though, but possible, nevertheless. 

A woman as a co-borrower can be a huge advantage when applying for a home loan. Even the Pradhan Mantri Awas Yojana offers unique benefits for a woman borrower.

Let us weigh in some benefits of this aspect:

Easy interest: 

The home loan interest rate is lower if a woman is applying as a co-borrower. Most lenders provide a 0.05% to 0.1% discount on the home loan rate if the primary co-applicant of the loan is a woman. 

For example: 
If a man takes a home loan by himself, he will pay an interest of anywhere around 7-10% (each bank has different interest rates) up to Rs 20 lakh for 20 years.

In this example, let the ROI be 8.1% for Rs 20 lakhs for 20 years, and the EMI is Rs 16,853.

Now, if he adds a woman co-borrower, his ROI can come down to, say, 8%, and his EMI would become Rs 16,729.

In 20 years, the total saving (assuming the EMI remains the same throughout) would be Rs 29,760. Of course, if the loan amount is higher, the savings would be more!

Also, the burden is lesser if your spouse is an earning member. The loan approval becomes easy if you can club both your incomes together.

Tax benefit: 

The most significant advantage you will get with a woman as a co-applicant is the array of tax benefits. If both the man and the woman earn, their combined income will be more beneficial as repayment becomes easy.

Women can, too, receive tax benefits for home loan repayments. According to Section 80C of the Income Tax Act, if you apply individually, your tax deductions can amount to up to Rs 1.5 lakh on the principal amount. Under Section 24 of the Income Tax Act, you can keep your savings to Rs 2 lakh when applying for a tax deduction. 

But, if a couple applies for a home loan, the same 80C of the Income Tax Act allows them tax deductions of up to Rs 3 lakh on the principal sum. Under Section 24 of the Income Tax Act, the interest can be up to Rs 4 lakh (Rs 2 lakh for each applicant). This also depends on the proportion of repayment each co-applicant takes care of. Consult your tax advisor and check the income tax circular for more details.

Credit risk: 

Lenders are more than willing to have a woman co-applicant for home loans as it reduces their credit risk, more so if she works or has a business. The lenders feel more comfortable including a woman in their home loan plans. 

Credit score: 

Your CIBIL score is a big deciding factor when applying for any loan, be it a student, business, personal or home loan. And a co-borrower or a co-applicant is always a good choice here. It is always better to have two CIBIL scores than one, as your application becomes stronger for hassle-free approval.

Age factor: 

Most banks will not let a 60-plus person apply for a home loan easily. The lenders might have a cut-off age limit too. Here also, if you are 50-plus, you can have your wife or daughter as a co-borrower.

Less stamp duty charges for a woman co-applicant is also a bonus here.

So, do not waste time and let the lady call the shots if you want your life to be easy.