Achche Din seem to have finally arrived for home loan borrowers at least. For, flush with funds and to give a boost to affordable housing, lots of banks and housing finance companies – including SBI Bank, ICICI Bank and HDFC – have slashed their home loan rates by up to 30 basis points over the last few days. Many of them had cut their rates just a couple of months back this year. With the latest cuts, home loan rates have reached their 10-year low.
However, it is the women borrowers who seem to have gained the most out of the recent rate cuts. For instance, ICICI Bank on Monday announced reduction in interest rates by up to 30 bps for home loans up to Rs 30 lakh. With this reduction, salaried women borrowers can avail home loans at 8.35% and others at 8.40%. Similar is the case with SBI Bank and HDFC also who have cut their rates to 8.35% for salaried women borrowers, while for other salaried people the rate has been kept at 8.4%. The move is aimed at boosting affordable housing along with encouraging working women to take home loans.
“Many banks and lending institutions have women-friendly products. Home loans, especially, are tailored to meet the special needs of women. Women-centric home loans can provide significant long-term interest savings. In a falling interest rate scenario, the EMIs are pocket-friendly as well. For example, a loan for Rs 30 lakh for 20 years with an interest rate of 8.60% has a full-term interest outgo of Rs 32.93 lakh. However, the same loan at an interest rate of 8.35% has a full-term interest cost of Rs 31.80 lakh. Women should be encouraged to access these loans. It also helps them create financial value by being owners or co-owners of appreciating assets,” says Adhil Shetty, CEO, Bankbazaar.com.
Interest Rate Offers of Different Lenders (Loan Amount is ₹ 30 lakh and tenure equals to 20 years)
|Lenders||Interest Rate (Salaried Women) (In % p.a.)||Interest Rate (Men) (In % p.a.)||Interest Outflow for Women (In ₹)||Interest Outflow for Men (In ₹)||Savings in Interest Outflow for Women Borrowers (In ₹)|
|State Bank of India||8.35||8.4||31,80,141||32,02,832||22691|
From the table, you can see a saving of around 22,700 for women borrowers over male applicants.
Stamp Duty and Tax Benefits
Stamp duty also forms a part of property cost. Lenders finance a housing loan at about 80%-85% of the cost of property. Therefore, even a slight difference in interest rates can make a huge difference in one’s home ownership cost. Women usually get a concession of 1-2% in stamp duty while buying a piece of property. Therefore, on a property worth Rs 30 lakh, a woman borrower can save around Rs 30,000 – Rs 60,000.
Moreover, women borrowers – like their male counterparts – are also eligible for a maximum tax deduction of Rs 1.5 lakh and Rs 2 lakh on the principal and interest repayments, respectively. However, if they are applying for a housing loan along with their husbands, they can receive a tax deduction on the home loan repayments in an equal proportion.