Benefits Of Taking a Joint Home Loan

Introduction

Buying a home is one of the biggest commitments and accomplishments for any individual. You would always aspire for a larger and better house. At the same time, there are other factors which determine affordability. A home loan is a great option to get your own home. However, a home loan measures your eligibility based on different criterions like age, income levels, other loans that you are still repaying, etc.

 

The Benefits of Joint Home Loan

Increased loan amount

The primary advantage of a joint home loan is the potential to secure a larger loan amount. This is because lenders now consider the combined income of all applicants instead of just one. This means you don't have to worry about compromising on your dream home due to financial constraints. You can afford a more expensive property in your desired location. After all, purchasing a home is a significant investment, and you wouldn't want to settle for a less ideal property because you're short on a few lakhs.

 

Simpler repayment process

When you have a co-borrower on your mortgage, the responsibility for repaying the loan is shared. This means the burden of large monthly payments is not placed solely on one person. The fact that both parties are equally responsible for the loan brings a sense of security and simplifies the repayment process. While your spouse or family member might agree to help with the mortgage in your name, officially adding them as a co-borrower can make them more committed to making the payments on time, as it increases their sense of ownership in the situation.

 

Equality In Loan Amount

When individuals combine their earnings to apply for a mortgage, they can secure a larger loan, enabling them to purchase a more spacious or superior property.

 

More Tax Deductions

By applying for a mortgage jointly, the individuals involved can claim tax deductions on their share of the home loan, if they are co-owners of the property and are making payments towards the mortgage. a) The interest paid on the principal of the loan is deductible up to Rs.1.50 lakh under Section 80C of the Income Tax Act. b) The interest on the home loan is also deductible under Section 24, up to Rs.2 lakh, if the property is being lived in; if it is rented out, the entire interest is deductible, meaning there is no cap on the amount. In a joint mortgage, each co-borrower is eligible for these deductions individually, leading to greater overall tax savings compared to a single borrower scenario. The exact amount of tax savings each co-borrower receives is based on their share of the loan's principal and interest payments, within the specified limits. Therefore, co-borrowers can adjust their loan contributions to maximize their tax benefits.

 

Reduced Interest Rates For Women Owners 

Certain lenders provide lower interest rates for home loans to women borrowers, typically a few points below the standard rates. To qualify for this reduced rate, the borrower must be the sole or joint owner of the property and be applying for the home loan.

 

Who Can Co-Apply for A Joint Home Loan?

An immediate family member can be your home loan co applicant. The co-applicant should be salaried or self-employed. Non-Resident Indians or NRIs are also eligible to be co-applicants.

There is a difference between a co-owner and a co-applicant. A co-owner is a joint owner of the property, but a co-applicant may not be. The basic principle is that all co-owners of the property will have to be co-applicants of the home loan. However, not all co-applicants are co-owners. Income of co applicants is considered for credit / loan appraisal.

The co-applicant can also be a non-resident Indian (NRI).

 

Joint Home Loan Eligibility and Documentation

To qualify for a joint Home Loan, all applicants sharing the loan must satisfy the Home Loan criteria established by their lender. These are the standard Home Loan criteria applicable across India.

•  You must be a citizen of India (including Non-Resident Indians) aged between 23 and 75 years.
•  For Indian residents, you need to be between 25 and 70 years old.
•  Applicants with a salary should have at least three years of work experience.
•  Applicants who are self-employed need to have been in business for at least five years.
• Your credit history must be flawless. If the main applicant's Home Loan eligibility is low, the co-applicants must have a credit score of at least 750.

*The maximum age for applicants is defined as the age at the time the loan is due. It's also worth noting that the maximum age for applicants can vary based on the type of property being purchased.

 

How To Check Eligibility for A Home Loan?

You can use the Home Loan Eligibility Calculator to determine if you qualify for a loan online. It's important to remember that the criteria for eligibility can differ from lender to lender. Therefore, before applying for a joint Home Loan, it's advisable to visit the website of your preferred lender to review their specific criteria for joint Home Loan applications.

 

Conclusion

In conclusion, taking a joint home loan offers benefits such as increased loan amounts, simpler repayment processes, equality in loan amounts, more tax deductions, and reduced interest rates for women owners. By combining incomes and sharing responsibilities, individuals can secure a larger loan, enjoy tax benefits, and potentially lower interest rates, making homeownership more accessible and financially advantageous.

To know how to pay your loan faster, read our blog: https://www.indiashelter.in/blogs/home-loan-balance-transfer-guide