Off late, the residential segment has witnessed a good demand across price points. A significant amount of latent demand came to the market during the festive season of Q4 2020 and it refuses to subside. According to an article in the Economic Times – the housing sales reached an exact 100% of the pre-Covid levels, with an 84% QoQ (Quarter on quarter) jump. The demand was rekindled by a multi-decade low home loan interest rate as per the Knight Frank India report.
This clearly suggests a rise in home buyers opting for home loans. There are numerous home loan benefits for women homebuyers if the property is registered in their name.
Lower Interest Rate
Recently State Bank of India and Kotak Mahindra Bank have reduced home loan rates. Kotak Mahindra Bank reduced its home loan interest rates to 6.65 percent per annum – the lowest in the market, followed by SBI with a home loan interest rate of 6.70 percent for loans up to Rs 75 lakh and 6.75 percent for loans above Rs 75 lakh to Rs 5 crore. Moreover, concessions are given on home loans for women borrowers. The concession ranges from 0.05% to 0.3% as compared to interest rates charged to male borrowers.
Prima facie, the discount seems too minuscule, but given the loan amount, it can have a considerable effect on the EMI amount. For e.g. The EMI on a home loan of Rs. 30 lacs at an interest rate of 6.7% for women borrowers comes to Rs. 16,750 and at 7% comes to Rs. 17,500. It means a saving of Rs. 750 per month and Rs. 1.8 lacs over a 20-year commitment.
The rates have been specifically reduced to encourage more women to buy a property. This discount in interest rates is to make home loans more affordable for women home buyers.
Stamp Duty Rebate
Stamp duty charges are lower if property registration is executed in the name of a woman. It is particularly kept lower to promote home ownership among women. However, it is usually 5% to 7% of the agreement value of the property purchased. These charges vary from state to state.
The Maharashtra government recently announced a one-percentage-point concession for women home buyers on stamp duty. As a result, the women home buyers now have to pay just 2% of the property value as stamp duty.
Under the Pradhan Mantri Awas Yojna (PMAY), it is mandatory to have the property registered in the name of the woman. This is again done to increase women home ownership. If a woman is opting for a housing loan under the flagship credit-linked subsidy program (CLSS), they also enjoy a concession on the interest amount of up to Rs. 2.67 lacs.
For applicants with annual household income up to Rs. 6 Lacs who wish to avail of this subsidy, a female member of the family must be at least the co-owner of the property. For applicants with annual household income from 6 lacs to 18 lacs, a subsidy of Rs. 2.3 lacs is available that too without mandatory female ownership.
If the property is jointly owned by a man and his wife and if she is also a co-applicant in the home loan application, then both of them will be able to claim tax deductions on their individual incomes, under Section 24 and Section 80C. If you are a first-time home buyer, then both man and his wife can claim deductions under Section 80EE and Section 80EEA along with the benefits of the former two sections. Thus, deductions up to Rs. 3.5 lacs on the interest repaid and up to Rs. 1.5 lacs on principal repaid can be availed by both.
You might like to read our guide on claiming income tax benefits.
Furthermore, buying a home under joint ownership or jointly applying for a home loan can also lead to enhanced loan eligibility.
With the home loan interest rates at an all-time low, it is the right time to buy a property and enjoy the home loan benefits. It is a delight for home buyers, especially first-time home buyers. So, before you consider signing up for a home loan, here are a few important factors to consider.
- Know your Credit Score
Borrowers with credit scores over 750 are likely to get loans at lower interest rates. Keep a tab on your credit score on a timely basis, especially if you plan to apply for a large loan. If your score is low, it is always prudent to improve your score before applying for a loan.
- Check your EMI Affordability
Before planning to buy a home, it is very crucial to check your existing EMI outgo and see if it is comfortable to squeeze in home loan EMIs in future. Loan lenders also factor in your Fixed Obligation to Income Ratio (FOIR) during the home loan approval process and prefer lending to those whose FOIR is within the range of 50% to 60%. The lower your FOIR, higher the chances of home loan approval. If it is not in this range, you can then improve your FOIR by either prepaying or foreclosing some of your existing debts.
- Consider a Long Home Loan Tenure
New home loan borrowers should plan their loan tenure considering the outgo of all EMIs including future commitment towards home loan EMI. Also, home loans do not attract any prepayment penalties as per the directives of the Reserve Bank of India (RBI). So, you can prepay your principal loan amount as and when you have some additional income, thereby reducing the term of the loan.
- Make a Higher Down Payment
A higher down payment results in a lower loan amount as well as lower EMI and interest outgo. Also, making a higher down payment increases the chances of home loan approval.
Off late, banks too are pushing for aggressive home loan interest rates with schemes for women borrowers, processing fee waivers as well as good discounts on digitally sourced loans. So, this is the right time to avail home loan benefits.
There are numerous properties in Mumbai catering to home buyers who are looking for a premium living space with all the luxurious amenities. So, if you are planning to buy an abode to spend joyous moments, properties by Ashwin Sheth Group are your ideal destination to start your home buying journey.