The economic participation of women in the Indian workforce has seen a significant increase over the years. As women become financially independent and make their own life choices, there has also been a parallel rise in those who have made a decision to stay single. This is reflected in the 2011 census of India which indicates that single women comprised close to 71.4 million of the country’s population in the same year.
The number increased by 20.2 million as opposed to 51.2 million in 2001, registering a hike of 39% within 10 years. Today, more and more women home buyers are breaking barriers emerging as primary applicants for loans. Not only this, women are also outperforming their male counterparts when it comes to ticket size of a home loan.
A survey by BankBazaar conducted in 2019 revealed that on an average a woman applicant was sanctioned an amount of 27.57 lakh vis-a-vis a 22.97 lakh for a man for a home loan. However, if you are a single woman looking to get finance to own your own house, there are a few tips you need to keep in mind to better navigate the home loan market:
Research property options
Chalk out your life goals and gather your financial data to understand your ability to repay the loan. Once you have a clear idea of your finances, look for housing projects within your budget and those that tick off all your requirements. Also search for housing finance options from banks and non-banking financial institutions with tailor-made options for first time buyers or single women home buyers.
Ensure an optimum credit score
A credit score of 750 and above is an important criterion for home loan eligibility that assures the lender of your credibility to repay the loan. Pay your utility, credit card bills as well as any other outstanding loans on time to avoid a low credit score and have a healthy credit history. This in turn increases your chances of being offered favourable home loan interest rates making you a preferred candidate as a borrower.
Add a co-applicant
As a single woman purchasing a home, you might face the obstacle of being denied a loan. However, you can enhance your home loan eligibility by adding a maximum of 3 earning family members as co-applicants on your home loan. Additional declaration of sources of fixed income such as interest on investments and rent received on a property, can further make your loan application attractive to lenders making approval easier.
Go for a shorter term
Once you have settled for attractive home loan interest rates offered by your financer, do not fall into the trap of opting for a longer loan term to reduce your monthly instalments. You will only end up paying more interest over the years on your home loan, increasing your financial liability. Instead, it makes sense to opt for the shortest possible term as per your financial capability as well as make partial payments is possible to reduce the interest outgo.
Make down payment
Most banks and NBFCs offer attractive home loan interest rates, however apart from these, having the option of an upfront payment for borrowers is a huge plus. It not only reduces your home loan amount but also interest to be paid over the years. Remember to keep a target of limiting your EMIs to 60% of your net income before tax. This helps you manage your financial responsibilities in the long run such as child’s education, marriage etc.
Enquire about foreclosure
Apart from home loan interest rates and home loan eligibility, you should also know about the charges levied by the insurance company to repay your loan prior to the completion of its tenure. Part payment comes as a relief by helping to reduce the loan period or the EMI amount as per your choice. You can utilise your yearly bonus or performance incentive to pay off the loan and take the financial burden off your shoulders.
For a hassle-free experience, women home buyers should take care of aforementioned points when thinking of applying for a home loan to make the most out of the opportunity. This is a key decision for long term contentment and can prove to be a huge benefit in the long run.