Women are taking bigger home loans, according to a primer on Home Loan Refinancing In 2021 by BankBazaar. In FY20, the average home loan ticket size taken by women was Rs 29.78 lakh. In FY21, the number went up marginally by 7.41% to Rs. 31.98 lakh. This uptick is driven by the changes necessitated by the pandemic, with people requiring space and privacy, and to fulfil their home-owning aspirations.
More women are becoming borrowers because many working women now consider homeownership a high priority. Women borrowers are also incentivised to be homeowners through benefits such as preferential rates on home loans and lower property registration charges.
Additionally, joint home loans are also being incentivised. Women are being encouraged to sign in as co-borrowers so that the loans can be availed at lower rates, and the overall loan eligibility can also be increased for the co-borrowing family.
Here is a quick look at how it helps women to be primary home loan borrowers.
Improves chances of loan sanction
Studies have shown women tend to manage credit better by ensuring timely and full repayments. Therefore, the presence of a woman borrower or co-borrower may also improve the chances of getting the loan. A co-borrower with strong credentials such as a high credit score and stable income could strengthen your loan eligibility, making it easier for you to get the sanction. Co-borrowing also splits the responsibility to repay among all co-borrowers of a loan. This reduces the burden a single borrower may feel and also reduce repayment risks.
Reduced interest rates
Women, whether the primary or secondary applicants, get home loans at lower rates than men. The difference could range from 0.05 per cent (5 basis points) to 0.1 per cent (10 basis points) in most cases. For instance, if a male borrower is offered a home loan interest rate of 6.75% p.a., upon adding his wife as a co-applicant and joint owner of the property, the rate could reduce to 6.65% p.a. The difference, while marginal, helps get lower equated monthly instalments (EMIs) and lower your interest outgo over the full loan tenure, which improves your cash flow. Let us understand this better with the help of an example.
Suppose a male borrower avails a home loan worth Rs.40 lakh for a tenure of 20 years. His EMI, with an interest of 6.75% p.a., will work out to be Rs 30,415 while the total interest outgo will stand at Rs 32,99,494. However, once an eligible female becomes a co-applicant, the lender lowers the applicable rate to 6.65% p.a., and the effective EMI reduces to Rs 30,177 and thus total interest outgo will drop to Rs 32,42,531. Therefore, the female co-applicant ensured long-term savings of nearly Rs 57,000.
Source : Times now news