A joint home loan is a housing loan that is taken by more than one person with shared financial responsibility. Any of your immediate family members, including your spouse, parents, and siblings, can be co-applicants for a joint home loan.
There are many advantages of taking out a joint home loan with a co-applicant. Here are some of the benefits that joint home loans offer:
All the co-borrowers can claim a tax deduction separately on both, the principal, as well as the interest portion of the loan EMI. This is as per Sections 80(C) and 24(B) of the Income Tax Act, 1961.
If you apply for a home loan with a co-applicant who also has a regular source of income, you can become eligible for a higher loan amount. You can also negotiate for better loan terms with the bank/NBFC. For example, you may become eligible for a longer loan tenure.
Lower Registration Fee and Stamp Duty
If you are applying for a joint loan with a female co-applicant, you can get a concession on the stamp duty and registration fee.
By applying for a joint home loan, all co-applicants can enjoy tax benefits as per the Income Tax Act, 1961. These include:
Section 24 (B) - A borrower can claim a deduction of up to ₹2 Lakhs on the interest portion of the EMI
Section 80 (C) - A borrower is eligible to claim a tax deduction of up to ₹1.5 Lakhs on the principal portion of the loan EMI
Section 80 (EE) - A first-time home loan borrower can get a deduction of up to ₹50,000 on the interest paid over and above the deductions claimable under Section 24 (B)
Note that each applicant is eligible to get a deduction of up to the maximum amount allowed under each section. For example, both co-applicants can get a tax deduction of up to ₹2 Lakhs each on the interest paid for the home loan, as per Section 24 (B).
Each co-borrower is liable to repay the loan with applicable interest, regardless of their share in the property. Their loan share is also important in determining the repayment schedule and tax deductions claimable.
Unless the property agreement states otherwise, it will be assumed that each co-owner owns an equal share of the property. To understand this better, let’s take the example of two applicants, Mr. Ram and Mr. Suraj, who have a loan share of 60:40.
Here, the loan EMI amount is ₹10,000 and they are liable to pay the same as per their loan share. This means, the instalment will be split into ₹6,000 and ₹4,000, between Mr. Ram and Mr. Suraj, respectively.
Similarly, the tax exemption will be calculated on each individual’s share of the EMI paid. So, for Mr. Ram, the deductions will be calculated on the ₹6,000 paid by him each month. Bear in mind that the total exemption claimed by all co-borrowers cannot exceed the actual EMI payment made to the bank.
Provided below are some common conditions you should fulfil before applying for a joint home loan to have a better chance of getting your application approved:
You can have a maximum of 6 co-applicants and a minimum of 2 co-applicants for a joint home loan
You cannot avail a joint home loan with any random individual, including your friend/s or business partner/s
Each co-applicant has to fill in a separate application form and provide individual documents for the same
Repayment for a joint housing finance plan can be done through a joint account of the co-borrowers or by splitting the EMI equally or proportionally among them
The eligibility criteria for a joint home loan vary across lenders in India. The general eligibility conditions for a joint home loan are as follows:
Borrowers must be citizens of India
Borrowers should be aged between 22 and 62 years (for salaried applicants) or 28 and 70 years (for self-employed applicants)
Work experience should be a minimum of 3 years (for salaried applicants) or 5 years (for self-employed applicants)
Borrowers’ CIBIL score should be over 750
All the co-applicants need to provide the following documents to the bank/NBFC along with their joint home loan application:
Proof of Identity - Aadhar card, PAN card, Voter ID, Passport, etc.
Proof of Residence - Aadhar card, Voter ID, Passport, rent agreement, utility bills
Proof of Income - Bank account statements of the last 3 months, ITR of the last two years, salary slips of the last 3 months, and/or Form 16
Property Documents - Past title claims, sales deed, conveyance deed, allotment letter, possession letter, latest property tax receipt, and copy of approved construction/extension
Recent passport- size photographs
Here are the different types of co-applicants you can apply for a joint home loan with:
If you apply for a joint home loan with your working wife, mother, or sister as a co-applicant, you can enjoy a host of benefits.
You and your female co-applicant can claim income tax deductions separately on the EMI payments under Section 80(C) and Section 24(B) of the Income Tax Act
You can also get a concession on the registration fee and stamp duty if the property is registered in the name of the female co-applicant
You become eligible for a higher loan amount as two earning co-applicants increase the total creditworthiness
If your income is insufficient, you can add your parents as co-applicants to increase your overall creditworthiness. This can help you obtain the desired amount of home loan. The tenure of a joint home loan depends, to a large extent, on the age of the oldest co-applicant.
Thus, the loan tenure may be limited to your parent's retirement age. This may result in your EMI amount being higher.
If you apply for a joint home loan with your sibling(s) who has/have a regular source of income, you can get a number of benefits. These include separate tax deductions for all co-applicants and easy negotiation of loan terms.
Keep in mind that many states charge a lower stamp duty/registration fee for women. Also, having a working co-applicant can help you negotiate for more favourable loan terms and conditions such as a lower interest rate or a longer tenure.
You can get several benefits if you apply for a joint home loan. For example, all the applicants of a joint home loan are eligible to claim the income tax deduction separately.
Additionally, if you apply for a joint home loan with a female co-borrower, you also get a concession on the registration fee/stamp duty (provided the property is registered in the name of the female applicant).
You can apply for a joint home loan with your spouse, children, parents or siblings. Meanwhile, you can not apply for a joint home loan with a friend, or business partner.
Yes. By doing so, you can even get a concession on the stamp duty/property registration fee that many state governments offer to women if the property is registered in their name.
No. Banks/NBFCs do not allow you to apply for a joint home loan with friends as co-applicants.