Home loans co-applicants frequently asked questions

Home loan co-applicants are the second person in the joint loans being taken act as a co-applicant. The loans have jointly been taken helps the individual to share the burden of the loans jointly with another person. The most common relation of the co-applicants is usually the husband & wife. In the case of joint loans, the income of both individuals is taken into consideration while approving the loan application of the applicants. The credit score of both the applicants is also taken while considering the loan application. Joint loans are more beneficial for applicants with a lower income. In the case of joint loans, the income of two persons is considered, and accordingly, the loan amount eligibility is being evaluated. Thus higher eligibility can be obtained by the borrower in case of the joint loans being taken. The documents of both applicants are also required, like identity proof, income proof, income tax returns statement, and employment proof. Etc. The loans can be repaid by any borrower amongst the co-applicants who avail of loans from the bank or an NBFC.

The people from higher income groups also benefit a lot by taking joint loans. The joint home loan borrowers can save higher on tax and take even higher loans than the single person income. Real estate prices have risen so high, especially in metros, that the amount of money an individual can spend on real estate is infinite. The maximum amount up to which the borrower can avail of home loans is Rs.3 crores. The income of the borrower should also be very high to avail maximum amount of the loans. The housing loans can also be repaid faster to become early debt-free if the bank does not charge any penalty on pre-payment. And also, getting a rebate on the loans can benefit both the borrowers saving money on the early repayment. The loans are charged at similar interest rates as the interest being charged on a single loan. The borrower should remember that the interest rates are evaluated on the cumulative interest rates, i.e., compounded annual basis, higher than the simple interest rates. The co-applicants can also take dual tax benefits on the loans in case of joint loans. Joint loans, if defaulted, can spoil the CIBIL scores of both persons.

FAQ about the Home Loans

• What are the terms & conditions for the joint loans?

The terms & conditions for the joint loans are similar to that of the loan being provided to a single person. The basic conditions include the loans installments should be paid on time after it is taken. The documents should be properly related to identity proof, income proof & employment proof. Also, the CIBIL score of both persons should be more than at least 600 points.

• What is the relation being required for the joint loans?

The relation can be amongst any family member like the husband & wife, brother-brother, sister-sister, father-son, father-daughter, mother-daughter. etc. The relation of any person is allowed in the case of the joint loans; it has no specific definition for the relation to avail joint loans.

• How much income tax can be saved in the case of joint home loans?

In the case of the joint loans, the borrower can take dual benefit of tax in case the joint loans are taken. Also, for that, both the persons should be earning, in that case, a dual tax slab benefit of Rs. 2.5 lakhs and Rs.2.0 lakh as additional income on interest repayment and Rs. 1.5 lakh on the principal amount. The exemption is doubled in the case of the two persons, and the above-mentioned exemption is for a single person.

• If one person is financially stable, then in that case though other family members are earning, is it recommended to avail joint loans?

If the borrower has full confidence in the employment that the job loss cannot happen, then, in that case, the person can take loans on a single name. But the added advantage of the joint loans is that dual tax benefits & lower interest rates are charged in case of the one person amongst the co-applicant is women. Also, joint loans with women can benefit with lower stamp duty being charged by most state governments.

• Does the possibility of the home loan approval increase due to the joint loans?

Yes, the bank gets confidence in the borrower that if one person cannot repay the loan, the other person can compensate. Also, the eligibility for the amount of loan approval gets increased as the dual person’s income is taken into consideration.

In the above data, most of the doubts related to joint loans are mentioned. Taking joint loans is better in the case of the two persons being earning in the family as the liability on loans gets distributed on two persons instead of one. Also, the dual tax benefit can be availed in the case of joint loans. Also, the chances of approval get increased in case of the joint application. And lower interest rates and stamp duty is being charged in case of the woman as a co-owner in the property