How Much Can You Afford?
It is important to first assess your affordability in terms of how much money you can pay for buying a home. There are two aspects to this, first is how much margin money is to be paid and second is how much EMI (equated monthly instalments) can be paid against the home loan without disrupting monthly finances.
As a single woman, you must set a realistic figure when deciding on a loan amount as you already may have other financial commitments. Banks give home loans to around 80 per cent of the value of the property and other costs like down payment, taxes, stamp duty and more need to be borne by the borrower herself.
For instance, if you want to buy a home worth Rs 50 lakh on loan, a margin money of Rs 10 lakh i.e. 20 per cent of Rs 50 lakh needs to set aside. Apart from this, an EMI of Rs 30,750 per month, considering loan tenure of 30 years and interest rate at 8.5 per cent per annum will have to be borne by you for the entire tenure. In case you feel it is not possible to arrange the margin money or paying such a high EMI would be difficult, then cut down the price range of the target property.
Saving For The Down Payment
Arranging the down payment could be one of the most challenging tasks for a single woman who is planning to buy a property against the home loan. The best strategy for single women is to arrange the margin money well in advance by investing money in appropriate instruments for this objective. For example, if a person invests Rs 15,000 in equity mutual fund SIP for five years and the fund gives a return of 12 per cent per annum, on maturity it will yield a corpus of Rs 12.37 lakh which can be used to make the down payment when availing a home on loan.
Maintaining a Good Credit Score
Banks and non-banking finance companies check the eligibility of the applicant as per their borrowing capacity and only then do they decide if the applicant is fit to be given a loan or not. Credit score is one of the most reliable ways of checking an applicant's financial standing.
Today, loan seekers with a credit score of 750 or more, typically receive the most attractive loan deals. Since single women do not have the benefit that couples do, where incomes can be combined to raise the loan eligibility, it is very important for them to keep an excellent credit score when they plan to apply for a home loan. This can be done simply by ensuring regular and timely payments of credit card dues or any other loan.
Many states are offering discounts or waiver on the stamp duty and registration charges for women home buyers, so such benefits must be checked from the authorities and the builder to reduce the cost of buying.
Look For Women-Friendly Loans
For female home loan applicants, there are many banks that offer special discount on interest rates lower by around 1 per cent. Several banks also waive any processing charge on home loan during its offer period.
Banks allow home loans up to a tenure of 30 years, so for the single women, it is always better to consider a longer tenure when applying for the loan. Lower EMI obligation can help in reducing the EMI burden in the initial years and once repayment capacity improves, then the borrower can prepay EMIs to clear the loan quicker.
For first time home buyers, the government has announced Credit Linked Subsidy Scheme (CLSS) that allows them to get interest subsidy up to Rs 2.35 lakh to Rs 2.67 lakhs (as per the buyer category being EWS, LIG or MIG) This scheme gives preference to women, especially widows and single working women.
Being Prepared For Emergencies
Single women must stay ready with a solid EMI repayment plan in advance to avoid stress on their existing financial capacity. It is better to create a contingency fund that can sufficiently handle EMI payment for at least six to eight months if there is a financial emergency such as a loss of employment. They can also try adding an additional source of earning that can be dedicated to servicing the EMI without putting strain on the existing income.
Before finalising a home and the lender, you must ensure that your financial position is strong to avoid last minute trouble.
(Adhil Shetty is CEO of Bankbazaar.com)
Disclaimer: This is an advertorial and NDTV is not responsible for the accuracy and completeness of the same.
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