Purchasing a home is everyone’s dream, it is a major financial decision and arranging funds for your dream home is a task too. In certain cases, banks do not allow an individual to take a home loan based just on their income. In this scenario, a joint loan application increases the chances of getting the home loan approved.
What is a Joint Home Loan?
A joint home loan is a category of housing loan taken by more than one person but under one application and all the co-applicants in this loan are equally responsible for the loan repayment. Joint applicants cannot be just a group of friends, it has to be parents, sibling, children and/or spouse. All the applicants applying for the loan are co-applicants or co-borrowers. In a joint home loan, there can be a minimum of 2 applicants and a maximum of 6.
Joint Home Loan Eligibility
- You must be a citizen residing in India.
- You must be a salaried individual with at least 3 years of experience.
- Salaried individuals between the age of 23 to 62 are eligible and can apply for a Joint Home Loan.
Benefits of a Joint Home Loan
The total income increases if you apply for a joint home loan, and this can make you eligible for a higher loan amount at a reduced rate of interest. Moreover, you can also negotiate with the lender to obtain more favourable terms on your home loan.
Since both the applicants are eligible for tax deductions in case of a joint home loan, it is also a great way to save on taxes. The tax benefits on joint home loan are mentioned as below:
- Under section 80C of the Income Tax Act, joint home loan borrowers can be eligible for a tax benefit of up to Rs. 1.5 Lakh on the principal amount.
- Under section 24 of the Income Tax Act, in case of a self-occupied property, both the applicants can get a tax benefit of up to Rs 2 lakhs.
- If the property is rented, borrowers can avail a tax discount for the complete interest amount.
By applying for a joint home loan, borrowers can avail a higher loan amount. However, it is not mandatory for both the co-applicants to make equal contribution towards loan repayment. This is one of the key joint home loan benefits as it provides flexibility in loan repayment as both the co-applicants can contribute towards the repayment depending upon their financial capacity. Also, make sure that you check your joint home loan eligibility before applying for the same. Having an idea of your joint loan eligibility will reduce the rejection chances of your joint home loan application. Also read guide to claim tax benefit on Joint home loan only at Finserv MARKETS.
Documents Required for Joint Home Loan
- Property documents
- Identity proof
- Address proof
- Income proof – Bank statement/Salary slip
- KYC documents
- Proof of co-ownership of the property
Please note: Each document mentioned here has to be furnished by every co-applicant/co-borrower.
Joint Home Loans for Couples/Parents/Siblings
In a family where the co-applicant(s) is also employed it makes sense to take a loan whose tenure goes upto 20 years. The loan amount gets doubled and the burden of EMI also can be shared equally. Moreover, there is a silver lining of tax exemption that await the borrowers. Another important point is the loan duration and EMI amount are also related to the relationship of the co-applicant. If the co-applicants are the parents in such scenarios, the EMI is higher and the tenure lesser but if the co-applicant is spouse or sibling, in that case the EMI amount is less and the tenure longer as it is given that the working period of the younger age group is longer, therefore, a prolonged repayment period is not a threat to the lender.
Tax Benefits of Joint Home Loan
Co-applicant(s) can enjoy tax benefits on principle repayment and interest income.
Each applicant can claim housing loan tax benefits for upto 2 lakhs under Section 24 of Income Tax Act but the interest claimed by co-applicants cannot exceed the actual interest to be paid.
In the initial phase of your repayment the major component in the EMI is the interest rate – maxim benefits can reaped during this phase.
The EMI component can be claimed as tax deduction under Section 80C of the Income Tax Act. In this scenario too, tax benefits can be claimed by each applicant.
Repayment of the Loan
The borrower gives the flexibility to the co-applicants to pay by cheques or ECS (Electronic Clearance Service).
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