The rise in property prices across India over the last decade has made it very challenging for prospective home buyers to own their dream home. Despite the skyrocketing of property prices, the introduction of joint home loan schemes by various financial lenders has facilitated the home buyers to fulfill the basic necessity of owning their dream home.
What is a Joint Home Loan and Who is Eligible to Apply for it?
A joint home loan refers to a housing loan availed by more than one person and repaid with equal or differential financial responsibility. The relationship between the borrowers determines the eligibility for a joint home loan. Immediate family members, including spouse, parents, children (sons and unmarried daughters), or siblings are eligible to be the co-applicants/co-borrowers of the joint loan. Friends, sisters, and live-in couples are not eligible to apply for a joint loan, even if they own a home together. So, it is not guaranteed that the co-owner of the property is always qualified to be a co-applicant of a joint home. Also, if you are a co-applicant in say, a Home loan available at Finserv MARKETS, it does not automatically make you the co-owner of the home too. Lenders usually allow up to six co-applicants while applying for a joint loan.
Benefits of a Joint Home Loan
Higher Loan Amount Eligibility
When you apply for a joint home loan with your spouse, or parents, or son, or unmarried daughter as a co-borrower, the total income increases. The larger the joint income, the higher the loan amount that can be availed. A higher loan amount would mean a bigger home. Also, it is useful to mitigate the risks caused by exceedingly high EMI to monthly income ratio. For instance, when you apply for a Bajaj Finserv home loan at Finserv MARKETS, the EMI would be assessed as a portion of your combined income. If your EMI to monthly income ratio is higher, then the probability to default the loan repayment would also higher. This would mean risk for the lending institution that would want to avoid such a situation by favouring a joint home loan.
Concessional Interest rates for Women Co-applicants
Few financial institutions offer lower house loan interest rates exclusively to women co-applicants, especially in cases where the women are also the co-owners of the property.
Flexible EMI Payment Options
When you jointly apply for a home loan, like say, a Bajaj Finserv home loan, you are eligible for a higher home loan amount. It is not mandatory for the co-applicants to equally contribute to the monthly EMI. Each of the co-applicants can enjoy the flexibility of deciding who shall contribute how much for the monthly EMI.
Higher Tax Benefits
When you jointly apply for a home loan, each of the co-applicants, individually, shall be eligible for tax exemption, i.e., the collective tax exemption limit is always higher in joint home loan cases.
Under Section 80C of the Indian Income Tax Act, each of the co-applicants (also co-owners) are eligible to avail tax deduction up to Rs. 1.5 Lakh on the principal amount paid.
Under Section 24(b) of the Income Tax Act, for a self-occupied property, the co-applicants can get an exemption of up to Rs 2 lakhs for each of the co-applicants.
If you have rented out the property, then you can enjoy the tax benefit for the complete interest amount, i.e., there is no maximum ceiling.
While borrowing joint home loans is largely helpful, it is certainly not without any footnotes. Here are a few situations when you should avoid applying for one.
- You are not a co-owner of the property.
- Your eligibility as a single applicant meets your loan requirement.
- You have a poor credit history.
- You are currently repaying an ongoing loan, availed as per your maximum loan eligibility.
- You are currently purchasing a cheaper property for investment purposes and wish to buy a bigger one to self-occupy in the future.
- You are about to retire soon.
Thus, it is advisable to be wary and keep these exceptions in mind while availing a joint home loan, despite the scales tilting towards its several fruitful advantages. When you decide to go ahead, consider securing a loan from a trusted financial institution such as Bajaj Finserv. Loan products from Bajaj Finserv are available on Finserv MARKETS, an online platform that has created a more seamless online purchase journey for financial products. Increased transparency, lower documentation requirements and faster loan disbursal make Finserv MARKETS an attractive platform to work with for your financial requirements.
Also, read about home loan process.
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