Owning a property after one starts working is amongst the first steps to build wealth. This holds true for working women too – single or married. The loan market is flooded with attractive loan schemes, and some of the best deals are reserved for female applicants. Buying a property can seem like a daunting task due to the paperwork and planning involved. However, taking the loan need not be daunting, even though it would have to be repaid with a single income.
If you plan to buy your dream home by taking a loan, here are a few tips on making things easier for single women.
Be Ready With Mandatory Documents
It is important to take steps that ease your loan application process. Keep documents like pay slips, increments slips, Form 16 and ITRs handy. In case you have availed another loan or closed a previous loan, do keep the documents ready for bank’s reference. This will establish your credibility as a borrower.
Assess Your Affordability
It is important to assess how big a loan EMI you can afford to pay disrupting your finances. You should make the same assessment for the down-payment you’ll be making. Since you are a single woman, the figure you should arrive at must be realistic and considered after all your financial commitments. Do note that banks gives Home Loan to around 80% of the value of the property and other costs like down payment, taxes, stamp duty and more needs to be borne by the borrower itself.
How To Arrange The Down Payment
Before you go for a home loan, you should arrange the margin money or down payment from your own pocket. This may involve large-scale saving or investing in instruments that can provide returns good enough for the objective. Investing Rs. 15,000 in an equity mutual fund SIP for 5 years would provide a corpus of Rs 12.37 lakh, assuming a annual rate of return of 12%.
Maintaining a Good Credit Score
Lending institutions refer to your Credit Score before granting a loan. A credit score is a three-digit numeric expression that reveals a person’s creditworthiness through her past loan and credit card use. It is one of the most reliable ways of checking an applicant’s financial standing. Usually, a credit score of over 750 is considered healthy for a lender to trust you with fresh debt. As a single woman, you should maintain an excellent credit score before you apply for a home loan.
Compare And Grab The Best Deal
Lending institutions offer attractive features and discounts for female home loan applicants. Many banks offer discounted interest rates of around 50 basis points lower to female loan applicants, while several also waive any processing charge on home loan during its offer period. It would thus be prudent to compare the loan offers to get the best deal. Since banks allow a tenure of 30 years for a home loan, it is better for the single women to go for a longer tenure when applying for the loan. This will help you in paying a lower EMI for the home loan, which makes it easier on your pockets. Once your income increases, you can use it to make principal pre-payments and clear the loan quicker.
Benefits Provided By The Government
For women home buyers, many states offer discounts or waiver on the stamp duty and registration charges, so such benefits must be explored with the local authorities and the builder to reduce the cost of buying. The government has also announced Credit Linked Subsidy Scheme (CLSS) for first-time buyers that allows the buyers to get interest subsidy up to Rs. 2.35 lakh to Rs. 2.67 lakh (as per the buyer category being EWS, LIG or MIG). This scheme gives preference to women, especially widows and single working women.
A solid EMI repayment plan should be ready in advance to avoid unnecessary stress on existing financial capacity. As a single woman, your familial responsibilities may be fewer. Use this to your financial advantage. With your higher disposable income, build some appreciating assets. You should also build a contingency fund that can sufficiently handle your EMIs for at 6 to 8 months if there is a financial emergency like job loss or delayed salary. You can also explore the option of having an additional source of income that can be dedicated to servicing the EMI without straining your existing income.
The writer is CEO at Bankbazaar.com