Are you planning to buy your dream home? Do you want a larger than normal home loan? What if we tell you that you can share your debt burden, get a larger amount of loan and avail income tax benefits? Regrob works to make your life better, so read on to find out how you can get all these benefits by taking a joint home loan.
So first of all, we will tell you what joint home loan is
Joint Home Loan
Joint home loan is a loan which is taken by more than one person. You can take a home loan in joint names if you wish to avail a higher loan amount.
In this case, your chances of home loan approval are higher than loans applied for in individual capacity. The combined repaying power of the applicants (two or more) is considered while sanctioning a higher loan amount. The income tax exemptions are also a major advantage that comes with applying for a joint home loan and the tax savings much more than in the case of a single-name loan. In a joint home loan, since the bank combines incomes of the applicants involved, a proportionately higher loan amount of loan will be sanctioned to them. Click here to read about smart ways to manage your home loan.
Banks will be ready to offer you higher loan amounts if you opt for a joint home loan. This is because of the higher repayment capacity as there is more than one person who can repay this loan. The ratio of increase in loan quantum depends on the income of co-applicant(s) as well as the reputation of the organization where he/she is employed. So a joint home loan seems like a pretty good idea to us!
Who is a co-borrower/co-applicant?
A Co-borrower is a person with whom you take the home loan jointly. The co-applicants for the joint home loan can be family members, including spouses, parents, siblings and offspring.
Who is a co-owner?
A Co-Owner is an individual that shares ownership in an asset with another individual/group. In this case, the asset is the property.
Eligibility and Conditions of Joint home loan
- In the process of applying for a joint home loan, the applicants involved have to submit relevant documents required for processing the loan such as: A copy of the Permanent Account Number (PAN), income proof, address proof, property documents and bank statements.
- A joint housing loan cannot be taken with any random person, or even a business partner. Only close relatives – spouse, parents, siblings or children can be co-borrowers in a housing finance scheme.
- Generally a Joint Home Loan can be taken by a maximum of 6 persons (minimum being two applicants). The final number though, depends on the bank’s discretion.
- Co-borrower may or may not be the co-owner of the property. But, banks may usually recommend a co-borrower to also be a co-owner of the property. Do remember that being a co-borrower for a house does not automatically make one a co-owner.
- Repayment of a joint home loan is the collective responsibility of both the borrower and co-borrower(s) and each of them is liable for the loan.
- Joint owners can also claim stamp duty and registration charges of a property.
- Each co-applicant has to fill in a separate application form and provide individual documents for the same loan.
- Repayment for a joint housing finance plan can be done either through a joint account of the co-borrowers, or by splitting the EMI equally or proportionally among them. You can opt for cheque or electronic clearance/standing instruction to your bank, as per your convenience.
- A dispute in ownership or repayment of loan can affect both the applicants, even if only one of them is at fault.
- 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.
- To get the benefit of higher loan amounts and tax breaks, your co-applicant needs to be an earner too. The co-borrower could be salaried or self-employed, engaged in business or a profession. If you decide to make your homemaker mother the joint applicant, then neither of the above uses will be available to you.
- Generally, friends or unmarried couples living together are not allowed to take joint housing loans.
Tax Benefits of Joint home loan
It allows both the borrowers to become eligible to claim tax benefit against the same house. Click here to read about Tax benefits on home loan.
If the home loan that you have taken is in joint names then you can save more tax as compared to when you have taken home loan individually. In this case, each of the applicant and the co-applicants can avail tax benefit individually.
Each applicant and co-applicant can separately claim a maximum tax deduction of Rs. 1.50 lakh per annum for principal repayment under Section 80C and Rs. 2 lakh per annum for interest payment, under Section 24.
In case you have a working son/daughter and the bank is willing to split the loan in three co-applicants, all three co-applicants can avail deduction up to Rs. 2 lakh each on self-occupied property.
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