Joint home loan? Risks and rewards

Are you planning to take a home loan? Would you like to enjoy additional benefits from it? Here’s the answer for you – a joint home loan. There are various benefits that joint home loans offer you. You can now apply for joint home loans instantly. A joint home loan is nothing but simply adding a co-applicant or co-borrower in your home loan application.

Let’s explore some interesting facts about these loans.

Who can be a co-applicant?

A co-applicant or co-borrower is your partner along with whom you are applying for home loan. Partner for home loan can be parents, spouse or siblings. Be careful of mixing the words co-owner and co-applicant/borrower. A co-owner is someone who has share in the property. Few banks insist that co-owners should also be co-applicants; however, the reverse is not true.

What documents are needed?

The documents needed for joint home loans are the same as any other home loan. The only difference is that here documents are needed from both applicant and co-applicant. General home loan documents needed are identity proof, address proof, salary slips and bank statements.

How about loan eligibility?

A common question asked by many people is – ‘Will the home loan eligibility amount increase if we opt for a joint home loan’? The answer is yes, it will. Banks will be ready to offer you higher loan amounts if you opt for a joint home loan. The reason for it is that your repayment capacity increases as there are now two people who repay this loan. How much it would increase depends on the income of co-applicant. Apart from income, organization reputation is also considered. Be sure that you compare multiple loan offers before deciding on loan eligibility.

Joint home loan tax benefits

We all use home loans to save tax. Joint home loan tax benefits are an extension to the tax exemptions provided by home loans. As we all know, we can claim tax benefit of up to Rs. 1 lakh of the principal amount of home loan under section 80C and up to Rs. 1.5 lakh under section 24 of income tax act. In the case of joint home loans, applicant as well as co-applicant can enjoy tax benefit for the contributions towards the loan. The amount of tax benefit that can be availed here would be according to the proportion of contribution, subject to the limits specified above.

Repayment process

Repayment of the joint home loan taken is the collective responsibility of both the borrower as well as the co-borrower. However, either of them can pay the home loan EMIs (equated monthly instalments) or they can create a joint account to make the payments. It is upon the borrowers to decide which option to choose among these. There is no real hard and fast rule for this.

CONCLUSION

As seen above, joint home loans are definitely beneficial as compared to normal home loans. In case you are looking for a home loan and you can speak to your blood relatives to get a joint home loan. However, be sure that the EMIs are paid as per schedule. If one of you fail to contribute towards the EMI payment, the other will be liable towards payment. In case of delay or default in EMIs, legal action will be taken against the borrower as well as co-borrower.

InvestmentYogi.com is a leading personal finance portal.

Disclaimer: All information in this article has been provided by InvestmentYogi.com and NDTV Profit is not responsible for the accuracy and completeness of the same.

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