Home Loan for Women Borrowers.
Posted by Anurag Mishra on June 8th, 2017
Home loans have become a popular way for the buyers to buy a new house; however, it has been observed that lately there has been a rising inclination of banks/financial institutes to motivate home loan for women. Successive measures by government and banks to encourage women empowerment and including women in all spheres of financial decision is a step in the direction of making women financially secure.
Some basic documents and criteria of loan for women borrowers:
- Loan application form
- Passport size photographs
- ID proof like voter ID, PAN Card, Adhar Card Driving Licence
- Residence Proof like utility bills (electricity, telephone, water etc.
- Those women who are not salaried employees, they need to submit business address proof
- Bank statement of last six months
- Completed loan application
- Passport size photographs
- Proof of identify (photo copies of Voters ID card/ Passport/ Driving licence/ IT PAN card)
- Residence proof (photo copies of recent Telephone Bills/ Electricity Bill/
- Property tax receipt
- Personal assets and financial liabilities statement
- Details of other loans if any
- A woman must be either the sole applicant or a co-applicant.
- The property for which then loan has to be sanctioned should in the name of the woman applicant or she should be the first owner.
Special bank accounts for women, concessional rates and special loans for women borrowers, all directed in the direction to motivate women home buyers.
Let’s have an understanding about the special privileges that a woman home loan borrower gets from the bank / financial institutes:
- Lower interest rate – The rate of interest levied on a home loan by banks or financial institutes is lower for women. It is lower by atleast 0.05%. For example: SBI has the scheme of HER GHAR, HDFC has scheme of WOMAN POWER
- Better probability of home loan application being accepted – Under the guidelines of Pradhan Mantri Awas Yojana, preference is to be given to women. Widows, single working-women, persons belonging to scheduled castes and scheduled tribes, backward classes, differently abled and transgender people will be given preference. Women borrowers are perceived as less risky by banks and HFCs and hence they hold a better chance of getting their loans approved. Banks do consider other factors like credit score and documents before approving the home loan for women.
- Lower stamp duty charges – In some states, if a property is bought in the name of a woman, the stamp duty levied is lower compared with what’s applicable for a man. For instance, in New Delhi, a woman has to pay 4% stamp duty compared with 6% for a man. This is also true in case of conversion of a property from leasehold to freehold, and in case of gifts.
One of the conditions as eligibility criteria for many banks for loan approval is presence of home loan co-applicant. Co-applicant is basically a person who acts as a guarantor and shares equal responsibility of repaying loan as the main applicant. Banks nowadays are insisting on having a co-applicant without educating the customer about its repercussion and legal liabilities. In case of women borrowers having a co-applicant increase your eligibility to avail high amount of loan but at the same time this can pose a few risks like:
- Dispute between husband and wife – In cases where you have your spouse as a co-applicant but not the co-owner, you can face the problem of repayment of EMI. This is applicable vice-versa. Any kind of dispute in the future leaves the co-applicant male or female in a mess.
- Asset risk of the co-applicant – In case the primary applicant fails to repay the EMIs, the burden falls on the co-applicant. Whether you are the co-owner or not you have to repay the loan.
- Reduced credit eligibility- Being a co-applicant reduces your credit eligibility up to 50% which may impact your future loan applications.
Although, being a co-applicant poses some disadvantages it has some benefits too like:
- Eligibility for higher amount – Having a co-applicant makes you eligible to apply for home loan of a bigger amount.
- Tax Benefits –As per Income tax Act, 1961, you reap the tax benefits. Joint ownership can be beneficial if both the spouses take home loans as each can claim tax deduction for the interest paid on loan.