Why Should Wife Avail Home Loan In Place Of The Husband?

It is a common perception we have towards women that they make a house feel like home but how often do we see women as owners of the house?

The times are changing, though, which has caused a surge in the number of women buying a property in their own name. As per BankBazaar’s Moneymood 2020 data,

Rs. 25.64 lacs was the average home loan ticket size for women as compared to Rs. 23.66 lacs for men. TransUnion CIBIL report of 2019, stated that there was a growth of 48% in the successful credit applications by women borrowers between 2015 and 2018 as compared to 35% growth amongst the male borrowers during the same period.

The following are reasons attributable to this new trend:

Financial independence amongst women

The women of the house are no longer dependent on their male counterparts for finances. Financial independence has also caused a revolution in the mindsets of society. The patriarchy that had dominated India since centuries is losing its sheen with women becoming self-dependent. The modern woman strives to be independent in all walks of life, including buying and owning house property for her and the family.

Rise in single women within higher income brackets:

Women are not lagging when it comes to earning capacity, and a lot of young women who are single and well settled financially are fulfilling their aspirations of owning a house. The rise in the average age of marriage for women and increased divorce rates are also contributing to an increase in single women in the country.

A plethora of benefits offered to women in securing credit for housing loans :

Changed mindset and rising incomes amongst women are contributing to the rise of women property owners. Another very important factor is the various benefits that women enjoy in securing home loans. With real estate prices skyrocketing, it is virtually impossible to purchase property without taking assistance of credit in the form of home loans. These benefits to women home loan seekers are mainly provided to encourage women to come forward and fulfil their dreams of owning their own house.

For young couples who are planning to go for a home loan, the following points enforce why it would be prudent for the wife to avail a home loan instead of the husband:

a. Discounted interest rates for women borrowers

Most of the banks offer special home loan interest rates for women. This discount is usually in the range of 0.05% to 0.1%. While in percentage terms these figures seem insignificant, in absolute terms, they do make a difference and can reduce your monthly instalments to some extent.

b. Higher sanction amounts coupled with simpler eligibility criteria

As per statistics, women default less in their payments as compared to men. Due to this fact, lenders are lenient in terms of eligibility criteria and sanction limits for women.

c. Favorable repayment tenors

Many lenders are offering longer tenors, up to 25 to 30 years or 70 years of age whichever is earlier to women borrowers to repay the home loan. The maximum tenor for male borrowers is usually capped at 20 years or up to 65 years of age whichever is earlier. This lowers the EMI burden and smoothens the financial planning, which can be diverted for other key purposes. Of course, women still have an option to prepay and foreclose the loan as per their convenience.

d. Lower stamp duty for women property buyers

Most of the state governments in India have relaxed stamp duty rates for property registered in a woman’s name. The relaxation varies from 1% to 2%, which again might seem minuscule as a percentage, however, is usually a sizable chunk of money in absolute terms considering the soaring prices of real estate.

e. Government boost through schemes like PMAY

PMAY stands for Pradhan Mantri Awas Yojana. It is a credit-linked subsidy scheme started by the government with the aim to provide “Housing for all”.

This scheme offers an interest subsidy up to Rs. 2.67 lacs to women borrowers. The benefits under this scheme are applicable in accordance with the annual income of the family categorised under Economically Weaker Section, Lower Income Group and Middle-Income Group 1 & 2. This scheme has resulted in a 6% rise in the number of women applicants for a home loan in India.

f. Equal tax exemptions for women home loan borrowers

Along with all the above benefits, women also enjoy equal tax benefits as men. As per the Income-tax Act, a deduction of Rs. 1.5 lacs per annum is permissible on the principal repayment u/s 80C and Rs. 2 lacs per annum is permissible on the interest payments of home loans u/s 24 of the act. The government has extended section 80EEA of the act for FY 20-21, this section provides additional deduction of interest payment up to Rs. 150,000/- subject to fulfilment of given conditions.

All women, at some point in their lives, would have wished to own a house with their nameplate on the door, which remained an unfulfilled dream for most. However, now is the perfect time for women to come ahead and purchase property in their name as the government and lenders are giving additional impetus to women borrowers.

In light of these benefits, young couples looking to purchase property should weigh the plentiful pros of availing a home loan in the wife’s name in place of the husband.