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Does It Make Sense to Opt for a Joint Home Loan?

By Finserv MARKETS - Jun 4,2019
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Does It Make Sense to Opt for a Joint Home Loan

A home is one of the biggest investments, financially as well as emotionally in a person’s life. A home is purchased after much thought. At times, the one that you like and decide to buy is more expensive than initially planned. This might prove to be an obstacle as far as eligibility for the loan amount is concerned.

You can still go ahead and buy your dream house with the help of a joint home loan. A joint home loan involves two or more people taking the loan to purchase a property. This reduces the financial burden on the people involved while ensuring a successful purchase. A Bajaj Finserv Home Loan made available on Finserv MARKETS can help you make the purchase with an easy home loan.

So, does it make sense to opt for a joint home loan? Yes. Here are the reasons to help you arrive at the affirmation.

1. Qualify for a Larger Loan Amount

There is a huge difference in the loan amount that a single individual could be eligible for and the loan amount the same individual can avail if taken jointly with another individual. For example, if you have an earning of Rs. 1.5 lakhs per month and wish to buy a property worth Rs. 1 crore, the bank would agree to fund 80% of the property cost, which amounts to Rs. 80 lakhs. However, this is possible only if you qualify as per the eligibility criteria of the bank.

Based on the calculations generally followed by banks, an income of Rs. 1.5 lakhs per month without any other liabilities will ensure a loan of only Rs. 91 lakh. This means considering cheaper homes and compromising on your dream home. If you believe you should not settle for any less with this one-time investment, go ahead and transpire the dream into reality with a Bajaj Finserv Home Loan at Finserv MARKETS.

2. Earn Tax Credits

Joint home loans come with assured tax benefits especially for spouses taking a joint home loan. This saves the family income flow from taxes.

The Income Tax Act (Section 80C for principal repayment and Section 24 for interest repayment) has provisions to let the co-borrowers claim both principal repayment as well as interest repayment as deductions from their income. The proportion in which the co-borrowers share the property determines the benefits that can be claimed. For example, if you opt for a joint home loan with your spouse as the co-borrower then both you and your spouse can claim a deduction on the principal and interest repaid separately, hinging on your share in the loan amount. An illustration will help clarify this better.

Home Loan repayment of Rs. 6 lakh Single Home Loan Joint Home Loan
Interest repayment Rs. 4 lakhs Rs. 4 lakhs
Principal repayment Rs. 2 lakhs Rs. 2 lakhs
Section 80C Rs. 1.5 lakhs Rs. 2 lakhs
Section 24 Rs. 2 lakhs Rs. 4 lakhs

Taking a home loan on your own will let you claim a maximum deduction of Rs. 1.5 lakhs on principal repayment and Rs. 2 lakhs on interest repayment. Now assume a scenario of a joint home loan with your spouse where repayment for the year comes to Rs. 6 lakhs of which Rs. 4 lakhs is interest repayment and Rs. 2 lakhs is principal repayment. Assume both have an equal share in the property. This qualifies both you and your spouse to claim up to Rs. 2 lakhs each under Section 24 and Rs. 1 lakh each under Section 80C. Clearly we have a winner with maximum savings in case of a joint home loan!

3. Gender Based Discount

Many lenders provide the advantage of lower interest rates to women. Interest discounts of up to 0.5% can be obtained if a woman is the primary borrower for a joint home loan. Let us see how this benefits us.

Home Loan of Rs. 50 lakhs Single Home Loan Joint Home Loan
EMI Rs. 42,760 Rs. 41,201
Interest Outgo Rs. 52.6 lakhs Rs. 48.8 lakhs

Suppose you take a home loan of Rs. 50 lakhs on your own at the interest rate of 8.3%. On calculations, the EMI would be Rs. 42,760 and the interest outgo would amount to Rs. 52.6 lakhs. Now suppose you get the same loan at an interest discount of 0.5% which results in 7.8%. The EMI will considerably reduce to Rs. 41,201 whereas the interest outgo will be only Rs. 48.8 lakhs.

So get that dream home you have been eyeing for long with a joint home loan while ensuring you get the get the best rates and terms from the lender. Apply for a Bajaj Finserv Home Loan with Finserv MARKETS today and convert your dream of owning a home into reality!

Finserv MARKETS, from the house of Bajaj Finserv is an exclusive online supermarket for all your personal and financial needs. Loans, Insurance, Investment and an exclusive EMI store, all under one roof – anytime, anywhere!

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Bajaj Finserv Direct Limited ("BFDL"), erstwhile Bajaj Financial Holdings Limited is a registered corporate agent of Bajaj Allianz Life Insurance Company Limited and Bajaj Allianz General Insurance Company Limited under the IRDAI composite registration number CA0551 valid till 10-Apr-2021. BFDL also renders services to Bajaj Finance Limited (‘BFL’) and Bajaj Housing Finance Limited (‘BHFL’) (referred hereinafter as ‘Lending Partner’) in sourcing of customers, providing preliminary credit support activities, fulfilment services and post-acquisition customer services related to lending business. Registered Office: Bajaj Auto Limited Complex, Mumbai – Pune Road, Akurdi, Pune – 411 035 CIN: U65923PN2014PLC150522