Higher home loan eligibility comes with multiple benefits. Joint home loans with co-applicants help in improving your loan eligibility. In a joint home loan application, the eligibility is improved by the co-applicant’s independent source of income and credit history. Family members, spouse or relatives can be the co-applicants. There is a fundamental difference between a co-owner and a co-applicant. Co-owners must be the co-applicants in a joint home loan application, but co-applicants need not be the co-owners.
Benefits of taking a joint home loan:
- When you take a home loan jointly with your wife, daughter or mother, and the property is owned by her individually or jointly, some states offer a lower fee for property registration.
- Succession and other legal issues are reduced if you jointly own a home with your husband or wife.
- The repayment of EMI has to be made from a joint account owned by the co-applicants. This enables ease of repayment and makes it easier to track the contributions.
- The bank combines incomes of both the applicants involved which means a proportionately higher loan amount of loan will be sanctioned to them. This is because of the higher repayment capacity as there is more than one person who can repay this loan amount.
- If one of the applicants is unable to pay the loan amount due to unforeseen situations, the bank doesn’t need to fear about defaulting on loan payment since there is another borrower who can pay the EMI.
Why take a joint home loan?
There are basically two advantages of taking a joint home loan which are as follows:
1. Higher loan amount: With a joint home loan, you can get a higher loan amount as income of all the applicants is combined to assess the repayment capacity.
2. Tax benefits: If the housing loan is availed by two or more people jointly, each of them can claim a deduction of up to Rs 2 lakh for interest payment and Rs 1.5 lakh on principal payment. However, the total deduction claimed cannot exceed the actual interest paid and the principal amount repaid during the year. However, please remember that a co-applicant who is not a co-owner is not allowed to claim these tax deductions. Similarly, a co-owner who is not a co-applicant on your loan is not eligible for these tax deductions.
Conditions for a joint home loan:
Here are a few points that you must consider before opting for a joint home loan:
1. Only close relatives such as spouse, parents, children or siblings can be co-borrowers in a housing finance scheme.
2. Each co-applicant must fill separate application forms and provide individual documents to avail the home loan.
3. You can have a minimum of 2 applicants and a maximum of 6 applicants in a joint home loan. However, the number of co-borrowers depends on the bank’s discretion.
4. To avail the tax benefits, your joint applicant also needs to be a co-owner of the house. And the tax benefits are available only after the construction of the residence is complete.
5. Joint owners can also claim stamp duty and registration charges of a property.
6. It would be wiser for each applicant to take separate life insurance policies in order to cover the loan burden in case either of the borrowers dies.
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In conclusion, a joint home loan not only helps to get a higher loan amount but also help to save money by earning tax benefits. So, it is advisable to take a joint home loan to reduce your debt burden and to repay the amount easily.