In India, until recent times it was usual for women to leave financial decisions to men in the family. Even working women, with incomes at par with the men folk would rarely involve themselves in investments, taxation, insurance etc. This also meant women would rarely get involved in creating assets for themselves. These days women are more aware of a need for financial independence. Individually or jointly with members of their family, women are contributing equally to creating assets including house properties.
PLANNING FOR A FUTURE
With inflation eating into savings, it is imperative for every individual to plan and invest their funds optimally. Women too are now taking charge and investing their savings so as to support themselves and their dependents equally. Financial institutions now offer lower interest rates to women and this has encouraged loans to invest in property, gold and businesses.
HERE IS WHY WOMEN SHOULD EXPLORE BORROWING
When deciding to build an asset, especially one involving large funding like a house property, it is essential to explore every available resource. By jointly borrowing, a couple can afford a property much higher in value than individually. On the other hand, it is essential for women as individuals too, to create an asset base that may hold them through their future. Here are some advantages to a woman participating in the families borrowing equation:
Income of 2 individuals provides higher eligibility than a single income
Women are offered home loans at a rate lower than others
Women are considered safer borrowers, making them more eligible
It must be noted, to enjoy benefits of preferential rates, a woman must be the primary borrower or co owner and co borrower of the house property.
1.Individual eligibility Vs Joint eligibility – Most financial institutions provide loans between 55 to 65 times of applicants’ monthly net income. This is subject to credit worthiness and previous loans. Let’s say A earns Rs 50,000 a month after deductions and B earns Rs 60,000. At 55 times, their eligibility would be
Since property values have sky rocketed, it helps to be eligible for a higher loan value.
2.Tax benefits – If 2 or more individuals have jointly availed a loan, it is possible the value of the house, loan and hence the payout may be very large. When these individuals jointly claim tax deductions, the tax benefit is doubled instantly. For self-occupied house,
If property bought on loan is let out, the entire interest paid, after deducting rent received can be availed as deduction for tax. In this case too, joint borrowing lends to increased tax benefit. Want to talk to our home loan advisor about your specific case? Call +91-8108899980 or Sign Up here for a quick call back.
3.Lower interest rates – Currently many financial institutions offer lower interest rates to women borrowing individually or jointly as primary borrowers. This segment is relatively under mobilized and women are perceived as safer borrowers. The difference of 0.05% may not seem as much, but money saved is money made! For women,
Banks prefer the husband – wife combination most, since it indicates some predictability of financial status about the near future. Parent-daughter and sibling co-borrowing require certain additional ownership and legal conditions to be fulfilled. Financial institutions also look for assurance against any future disputes through discussions and affidavits before approving loans in these cases.
Here are some possible joint borrowing options: Husband and wife, Father and unmarried daughter, Mother and unmarried daughter, Brother and sister
As every individual, women should involve themselves in financial discussions and decisions. Through careful consideration of every option available, women and men can create an overall portfolio and a steady asset base for themselves.
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