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
- It increases the loan eligibility thereby granting the loan to the wishful lenders.
- With many borrowers, the scope to buy a house in the preferred location goes higher.
- The budget gets enhanced for the loan which allows the lender to buy a bigger house.
- This category of loan fetches you maximum tax benefits.
- There is also a provision for lower interest rates for women.
- The repayments gets shared. Therefore, equal liability for repayment.
- Attractive interest rates are offered over and above all clauses.
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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