Home Loan- A boon when female is a co-applicant

It has been a trend with successive governments to introduce policies that encourage women empowerment and aid financial inclusion of women. Owning one’s own home does impart a sense of financial security, especially for women. Banks and financial institutions have conceived schemes to encourage women to be co-owners of a home or co-applicants while taking home loans. Here’s a sneak peek into what lenders offer women when they are co-applicants in a Home Loan.

Special interest rates

The factor that attracts the maximum attention when one applies for a home loan is the interest rate. Given the soaring property prices, it is obvious that home loans are for huge amounts and run for long durations. Therefore, even a small change in the interest rate can go a long way in either increasing or decreasing the interest burden for the borrower. Many banks offer a differential of at least 5-10 basis points to women borrowers or co-applicants. Call it a ‘Women Power’ drive or a ‘Her Ghar. Her Right’ initiative, concessional rates in home loans with women as a co-applicant are a definite advantage that you shouldn’t ignore or look the other way.

Quick loan approvals

While all lenders have a clear-cut process for accepting loan applications, such as the eligibility criteria, required documents to be submitted for scrutiny, and proof of a healthy credit score, women are perceived to be less risky borrowers as compared to men when it comes to servicing a home loan. The chance of a loan application being accepted when a woman is primary applicant or joint applicant is higher. Add to this, the lower interest rates as mentioned above and what you have is a significant advantage of home loan with a female co-applicant.

Tax deduction benefits of home loan

By applying jointly for a home loan, tax deduction available can be enjoyed by the co-applicants separately, provided that each of them is contributing to the home loan repayment. Principal repayments are eligible for deduction under Section 80C of the Income Tax Act up to a maximum limit of Rs.1.50 lakh. In a joint home loan, since each co-applicant is eligible individually for the above deduction, the collective tax benefits are much higher than in the case of a single applicant loan. The actual amount of tax benefit enjoyed by each co-applicant is in proportion to their contribution in repayment of home loan – principal and interest component. Co-applicants can therefore plan how much tax benefit they would like to avail based on which they can decide what proportion of the loan each is going to repay. Now, these are unbeatable benefits of home loan.

To summarise, if you are buying a home of your dream, and wish to avail a home loan, it will be a boon to have a female co-applicant as bankers and the government are offering you all the benefits and privileges to make your dream come true.