I AM 28 AND I WANT TO BUY A HOUSE. WHAT STRATEGIES, CHALLENGES SHOULD I TAKE CARE OF WHILE PLANNING MY FIRST HOME PURCHASE?
I'm 28 and planning to buy my first home in Delhi. Buying house looks easier than the actual process. What key financial strategies, challenges, and benefits—such as loan planning, government schemes, and credit readiness—should I consider to ensure a smooth, stress-free home buying journey?
Advice by Manu Singh, Business Head – Housing Finance, Kotak Mahindra Bank
Women buyers are increasingly becoming a prominent force, driving the surge in home sales across the country. A recent analysis showed that women bought 14% more properties in 2024 than the previous year in major urban areas, demonstrating their greater financial independence and the evolving social dynamics.
Gracefully embracing the words of renowned architectural designer and urban planner, Le Corbusier, who said: “The home should be treasure chest of living,” Indian women are finding their homes as abodes of financial security and independence with a sense of belonging and a comfortable surrounding for the entire family. However, such a precious asset must be managed diligently and efficiently so that there is no ‘mortgage distress’ that can ruin the peace at home.
Let us understand how one can prepare for a smooth financial journey to buy their first home:
Assess your financial readiness
Before one begins the look-out for an ideal home, one must have clarity about the Budget that one would want to spend on her dwelling. Once an affordable figure is set, she should work backwards to assess her financial preparedness, assets at disposal, the current income and its stability, and the overall repayment capacity – duly considering other ongoing expenses. It is ideal to check the credit scores and ensure that you would not have much difficulty in getting the required sum as credit.
It is equally important to evaluate one’s savings and assets, keeping aside a sufficient emergency fund and allocating enough for regular other investments. If you have a longer work life ahead, then you may consider the same in the tenure of the payment and the EMI that you would like to shell out. It is also advisable to seek the help of a financial planner to create a comprehensive plan for buying a home.
Research & compare home loan options
The next target is to zero in on an ideal home loan. Here, you must do some thorough reading and due diligence not to miss out the benefits that various institutions may offer. For example, you may get a lower interest rate and downpayment if you have an impressive credit score and relationship with certain bank. Then, you have to choose whether a fixed or a floating rate is ideal for you given the current interest rate scenario. For example, if you are comfortable with the current interest rate and believe that it may go up, then choose a fixed-rate home loan. Conversely, if you are uncertain about the future movement of the rates, it may be wise to select a floating-rate home loan.
Bankers in general would say that women are better borrowers than men, making home loan approvals quicker and more accessible. They also get a lower interest rate due to their lower credit risk and concessional interest rates offered by lenders.
Down payment & additional costs
Many lenders typically ask for a down payment of 20% of the property's value, but this can be brought down if one utilises various government programs, affordable housing loans and existing relationships with lenders. An example is the Pradhan Mantri Awas Yojana (PMAY) or affordable housing loans can offer lower down payments, sometimes as low as 5% to 10%. Many lenders are open to customer negotiations for a lower down payment, especially if you have a strong credit score and a low Fixed Obligation to Income Ratio (FOIR) - financial metric used to understand a borrower's capacity to repay, by taking the total fixed monthly obligations, dividing that figure by the monthly income, and then multiplying the result by 100. One can also improve the same by reducing the existing debt obligations.
Many banks are open to what they call ‘proportionate release option’ by which the down payment can be paid in smaller instalments over a period while some offer a loan to value of upto 90% of the property value as a loan. Borrowers can also explore options like personal loans or loans against CDs to cover the down payment. Ultimately, your income stability and a higher credit score would work in your favour.
Understand fees, charges around home loans
While the home loan as a lump sum amount may be hogging your attention, one must also take note of the initial fees that seem hidden in some sense. For example, there is a processing free for a home loan which also can be obtained after paying other charges. In all, there are loan related fees, document charges and legal and government fees. Compulsory charges like the stamp duties that account for 5-7% of the property’s market value or the registration fees amounting to 1% of the same or the GST should not come as a shock to your calculations.
Government schemes & tax benefits
The government provides benefits and incentives to women home loan borrowers through various housing loan schemes, such as the Prime Minister's flagship Pradhan Mantri Awas Yojana. Many states offer concessional stamp duty rates for women, reducing interest outgo and loan EMIs.
Additionally, the Indian government has launched various initiatives aimed at providing first-time homebuyer advantages for women. The Pradhan Mantri Awas Yojana (PMAY) offers interest subsidies ranging from 3% to 6.5% for the Economically Weaker Section (EWS), Low-Income Group (LIG), and Middle-Income Group (MIG) categories. State governments also provide incentives specifically designed for first-time women buyers. The Affordable Housing Fund (AHF) set up by the National Housing Bank (NHB) offers financial support for affordable housing projects to encourage homeownership among women.
Women borrowers in general are eligible for several tax advantages concerning both the principal and interest of housing loans. According to Section 80C of the Income Tax Act, they can receive deductions of up to Rs 1.5 lakh for the repayment of the principal amount. Furthermore, under Section 24(b), they can claim deductions of up to Rs 2 lakh for the interest paid on their home loans. In cases where the loan is taken jointly with a spouse, both applicants can independently claim these deductions, effectively enhancing the benefits.
2025-05-20T08:50:30Z
