As a single woman, owning a house gives a sense of confidence and achievement. If you have a stable income and sound financials, you can buy your dream house by applying for a home loan.
Today, single women in India can avail of several benefits by taking a home loan. Some of the benefits you can get as a single woman while applying for a home loan are:
- In line with the government’s policies towards affirmative action, women are given preferential interest rates as compared to male applicants.
- You can secure a higher loan amount to get your dream house.
- You can choose a longer loan tenure to pay off your loan amount without any defaults.
- Lenders offer up to 2% lower stamp duty for women.
- Women are eligible to get tax benefits like their male counterparts.
- There are specific government schemes for single women home loan borrowers like the Pradhan Mantri Awas Yojana which provides interest subsidy of upto INR 2.67 lakhs* and is provided exclusively to women in mid to lower income groups applying for a loan to buy their first home.
So, if you are a single woman who wishes to apply for a home loan, the following tips can help you make an informed decision while applying for a loan.
Tips to Make an Informed Decision while Applying for Home Loan:
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1. Choose to pay a higher down payment
As a single woman, it would be wise to save money to make a large portion of your home’s value as a down payment. When you pay a higher amount as a down payment, you basically reduce the loan amount payable. Having a lower loan amount can also lower the interest rate, resulting in paying lower EMIs for the entire repayment tenure.
2. Assess your needs
Before applying for a home loan, you must understand how much you need as a loan and how much you can afford to pay every month as EMIs. You will need to factor in your monthly incomes and other financial obligations to determine your affordability. Every lender has a housing loan emi calculator that is available for free. It allows you to figure out a suitable EMI based on three main components – loan amount, interest rate, and loan tenure. The best part is that you can alter their values until you reach a suitable figure.
3. Keep all your documents ready
The stronger your loan application, the better are your chances of getting the lender to sanction your home loan. While applying for a loan, it is prudent to submit a mobile number-linked Aadhaar card and PAN for KYC, statements from bank accounts that are linked to your PAN and Aadhaar card, proofs of salary increments, bonuses, reimbursements, and promotions to strengthen your case. Including these documents along with the other documents required for a home loan in your loan application will increase your chances of securing a better home loan deal.
4. Keep payments to a bare minimum
Since a home loan tenure is between 10 to 15 years, any financial instability in the future could hurt you. It would be wise to keep the loan amount as light as possible by paying a larger portion of it as a down payment. For instance, if your house is worth Rs. 70,00,000/-, it would be prudent to pay at least 20% (INR 14 lakhs) of it as a down payment. This way, you can lighten your loan burden. You must also consider other expenses such as stamp duty, registration cost, insurance amount, etc while doing your home loan payment calculation. If you are falling slightly short of funds for the down payment, you can cover the shortfall through a personal loan which can be repaid within 12-60 months.
5. Ensure to maintain a good credit score
Your credit score plays a vital role in your home loan application. Lenders determine your creditworthiness through your 3-digit credit score that indicates your credit history. It ranges between 300 and 900, and the closer you are to the 900 range, the greater are your chances of securing a home loan with a lower interest rate. So, you will need to pay off your existing debts and maintain a good debt-to-income ratio before applying for a home loan.
6. Ensure to have a co-applicant
As a single woman, you can substantially enhance your home loan eligibility if you have a co-applicant. You can get up to three co-applicants in your home loan application. Ensure that they are your family members or people you can trust implicitly. Co-applicants with better credit scores and income can help you secure a higher loan amount, which you can use to purchase your dream house. On the other hand, all co-applicants are eligible for tax deductions under the Income Tax Act.
7. Make better use of government schemes
The government of India has several home loan schemes to help women borrowers manage their finances, which include lower home loan interest rates, tax benefits, Pradhan Mantri Awas Yojna (PMAY), and lower stamp duty. Some states also offer specific waivers and interest subsidies for single-women homeowners. You can leverage these benefits while applying for a home loan.
So, if you are a single woman, make sure you have all the documents required for a home loan and follow the above-said advice to take a home loan that best serves your needs.
