Marriage can wait, but home buying?
Updated: Jan 30, 2020
Indian women, with disposable income, make up for one-fifth of the home buyers in India. To acquire a home through inheritance or marriage is slowly becoming a thing of the past.
One such story is of Karuna PS who bought her house as a 26-year-old in Bangalore in 2008. It was a result of dogged determination and prudent financial planning. The need for this stemmed from her childhood living situations. Karuna grew up in a joint family, where her parents were allowed to stay as long as her grandparents were around.
The need for a home
There was no promise of inheritance or ownership of the house. There were times while she grew up, when her family were on the verge of being asked to leave due to familial fights, she recounts.
“I grew up with this weighing heavily on my mind and I started working early on. I started my first job when I must have been 19. The first thing I did when I got my first pay was to start investing in a mutual fund through a Systematic Investment Plan (SIP). Besides SIP, I used to put away money in chit funds,” says Karuna. She pursued her graduation from a distant learning institute in order to start earning early.
Finding the funds
She bought the house by paying ₹ 21 lakhs, for which the bank gave her 85% loan. The rest 15% came from her savings. She continues to pay EMI on the loan even to this day. “I would not like to close that loan because I want to use it for tax benefits,” she added. Government of India allows an individual to claim a tax benefit up to ₹ 2 lakh paid towards interest on a home loan on an annualised basis under Section 24 of Income Tax Act.
While she continues to invest money, she has no particular financial goal in mind. “I invest because it is good to invest. The school fees are rising, we may have some future unexpected expenses,” she adds.
Today she is a Bengaluru-based finance professional who lives in the house she bought. She lives with her family – her parents, husband and a young son. “I continue to invest in SIPs, in fact, I have increased my SIPs and I also continue to invest in chit funds, they are my go-to investment methods,” added Karuna. Chit fund is a rotational saving method, in which a group of people get together, agree on an amount to be given on a monthly basis. Every person is called a subscriber. This amount is pooled in and is given to one person (who is also a contributor) every month.
Women and home-ownership
Karuna is part of a tribe that is growing in India today. A recent study suggests 70% of women and 58% of men prefer real estate as their first investment. Also, single women save up to 60% for a property; men only 38%. Having recognised the growing independence of women in home-buying decisions, the banks are quick to cash in this market. In the recent past, many banks offer interest rates for women a tad lower than it does for men. Some banks offer a 0.05% lower interest if the primary loan holder is a woman. Either she can be a single or joint applicant. As do some state governments who have lower registration rates if the home buyer is a woman.
All these factors along with the growing need to take charge of their lives have to an increase in home-ownership by women. Whether you want to buy a house to live in it now or for the future, saving enough corpus through investments, so you are not burdened with a heavy home loan is the way to go.
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