For a single woman, the prospect of purchasing a home can be quite a challenge as compared to purchase of a home by a married couple. The process is easier for married people as they can plan together and work as a team in identification, financing, and other aspects of buying property. Thus, if single women can come up with some kind of a smart strategy or a framework for home loan, then their path towards ownership of a house is easier and smoother.
Presented below are certain vital guidelines that can be used by single women when going for a home loan.
What amount of home loan is affordable?
The very first and most vital step for all single women when availing of a home loan is gauging whether or not they can afford the home loan and the amount of money that they can pay towards purchase of a house. This aspect can be subdivided into two major items, the first being the amount of margin money that has to be paid, and the second being the amount of equated monthly installments/EMIs that can be paid towards home loan payments without it causing disruptions in the monthly budget.
It is important for all single women to plan a realistic amount when calculating on a home loan figure as other financial expenses and commitments may already be ongoing. About 80 percent of the total value of a property can be availed as home loan from banks. Additional expenses like taxes, down payment, stamp duty, registration, etc. have to be paid by the home loan borrower.
For example, if a single woman wants to purchase a home valued at INR 70 lakhs through a home loan, then she has to keep aside a margin-money of 20 percent of the home worth of 70 lakhs, i.e., INR 14 lakhs. In addition to the 20 percent, she will also need to come up with the EMI amount of over INR 32,000 every month, for home loan tenure of around 30 years, at an annual interest rate of around 8.4 percent. If the above figures associated with the margin money and the EMIs do not seem affordable, then you should look towards purchasing a home that is worth lesser than INR 70 lakhs and within an affordable range.
How to save for a home loan down payment?
Another aspect of home loan for a single woman that can pose a challenge is saving for the down payment. One of the best ways to gather funds for the margin money or down payment is by saving and investing in different instruments that offer good returns, beginning from the time you hit the job market.
For instance, investment of INR 14,000 in equity mutual funds via a systematic investment plan/SIP route for a period of 5 years, with an annual return rate of 12.5 percent, will allow you to accumulate a corpus of around INR 13 lakhs, which can then be used for making a down payment when applying for a home loan.
Keeping a good credit score
Financial institutions like non-banking financial companies and banks, etc, verify the eligibility of the home loan applicant according to the capacity to borrow money. Only after such verification do the financial institutions make a decision about whether or not a specific borrower is fit to avail a home loan. One of the best methods to check the financial standing of a home loan applicant is his/her credit score.
In today’s times, individuals (single women, single men, married couple, etc.) with a credit score of 750 or more, are most likely to get offered the finest home loan deals. Single women do not have the same advantages that couples have, such as combination of the incomes of both of them to increase their eligibility for home loan. Hence, it is vital for single women to maintain a good credit score at the time of their home loan application. Making sure of timely and regular payments of different loans, credit card bills, etc., can help maintain a good credit score.
Benefits from the government
A lot of states are now providing waivers and discounts on registration charges, stamp duty, etc., to female home buyers. Hence, single women should check from the builder and other relevant authorities about the availability of such governmental benefits in order to lower the overall purchase cost of the dream home.
Search for home loans that are women-friendly
There are several banks and finance companies that offer special deals and discounts of 1 percent or more on home loan interest rates for women home buyers. During such offer periods, banks even tend to waive off their home loan processing fees for female applicants.
Home loans offered by banks can have a maximum tenure of 30 years. Single women should opt for such longer home loan tenures when applying for them. A longer tenure means that the EMIs will be lower, which can be really helpful in the initial years when the paycheck/salary is low. However, as your salary increases, your capacity to pay a higher EMI also increases, and subsequently single women can prepay their home loan EMIs and quickly clear off the loan.
People, especially single women, who are purchasing a home/property for the first time, need to know about the CLSS/Credit Linked Subsidy Scheme program of the government. The scheme allows first time buyers to receive a subsidy on interest ranging between INR 2.35 lakhs and INR 2.67 depending on the category of the home buyer (categories being LIG, EWS, or MIG). The program offers more preference to women, particularly to single working women and widows.
Be prepared for any and all kinds of emergency situations
It is important for single women to stay prepared in advance with some solid plan for repayment of EMIs so as to avoid stressing out their current financial capacities. A great option is to create an emergency fund, regularly contribute to it, and keep it growing. The contingency fund should be big enough to handle the EMIs and other monthly expenses for a period of at least 6 months, during unforeseen situations like loss of job, etc., that can adversely affect the income stream.
Single women may also try to add some extra sources of income which can solely be directed towards payment of the home loan EMIs, thereby lowering the burden on the current income levels.
Before you finalize a lender and a property, it is important for all single women to make sure that their financial standing is strong and solid. This will help avoid last minute problems.