Why opting for a joint home loan is better than alone ?

A home loan is typically the largest responsibility in a person’s life, necessitating careful consideration. You may desire to buy a property that is rather expensive, and as a result, you may not be qualified for the loan amount that you want. A joint home loan might help in this situation. This is a Home Loan that is taken out by two or more persons to purchase a home. You and your spouse, parents, children, and select siblings can apply for a combined home loan. Let’s take a look at everything you need to know about a combined Home Loan now that you know what it is.

Co-Borrowers

The individual who takes out the Home Loan with you is known as a co-borrower. Of course, you’ll sign the same paperwork like everyone else. It’s important to note that this is not the same as a co-owner, who is someone who shares ownership of a property with you. Lenders frequently require co-owners to be co-borrowers. The opposite, on the other hand, does not have to be the case. A co-borrower does not always have to be a co-owner. They don’t have to own the property to share the burden of the loan with you. A joint Home Loan is usually taken out by spouses or parents and children, as you may be aware. It’s important to note that you can’t get a Home Loan with a friend or coworker who isn’t married. Furthermore, a brother and sister are not permitted to be co-borrowers.

Term of the Loan

Joint Home Loans often have longer terms, especially if the co-borrowers are married. In most cases, the maximum loan term is 25 years. However, if the co-applicants are siblings or have a parent-child connection, the maximum duration may be limited to 10-15 years, depending on the parent’s age. This is because the loan repayment is based on the parent’s salary, and the maximum loan term is determined by the parent’s retirement age.

Repayment

Despite the fact that the loan is taken out by many people, only one of the borrowers will be responsible for paying the EMI. You can, however, opt to pay from a single account or a joint account in which all co-borrowers are account holders. If you need help from others, you can open a joint account and ask co-borrowers to contribute money to it. Then you may use that account to pay your EMIs. It’s worth noting that all co-borrowers are jointly and severally accountable for the loan’s repayment. This implies that if one of the borrowers defaults on the loan, the remaining borrowers will be responsible for repayment.

Documentation

Both applicants must provide the required Know Your Customer (KYC) papers when applying for a shared home loan. Address evidence, identification proof, proof of income, and bank records are all examples of this. As a result, two sets of KYC papers will be required here.

WHAT ARE THE ADVANTAGES OF GETTING A JOINT HOME LOAN?

Choosing a shared loan provides a number of advantages, some of which are listed below –

  • Tax Benefits: Under a shared house loan, all co-borrowers can claim a tax deduction on a proportional basis under Section 24 of the Income Tax Act on interest repaid up to INR 2,00,000 and Section 80C on capital returned up to INR 1,50,000. Co-applicants can thus determine how much tax advantage they would want to get and, as a result, select what share of the loan each party would pay. While the tax benefits for both an individual and a combined house loan are the same, the benefits in absolute terms are greater with a joint home loan.
  • Eligibility for a larger loan: Having several applicants for a home loan boosts your chances of receiving a larger loan, allowing you to purchase a larger property. When determining repayment ability, lenders look at the overall income, and having a shared income boosts your chances of acquiring a bigger loan.
  • Women Co-applicants Get Special Interest Rates: Many lenders in the market today provide women co-applicants a discounted home loan interest rate. This only applies if the woman is the property’s sole or joint owner and will be the principal or co-applicant for the house loan.

Choosing a joint home loan is advantageous for applicants because it not only allows them to purchase a larger or better home, but it also assures that the debt and overall obligation are shared, reducing the strain on a single individual. We recommend taking for a combined home loan if you want to buy your ideal home.

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