Everybody wants a big house. But before that everybody needs a house. Buying a home is one of the biggest investment and financial decision which we take in our life. Home Loan by different banks is the one which has made this possible. But it is not possible for everyone to to own a big house because of the required investment. The best option of home loans also proves to be inadequate as your expense on purchasing home is more than your eligibility. Joint Home Loans is the solution to this situation. A Joint Home Loan allows two people to be the co-owners of the house and co-borrowers of the home loan while taking into account their combined income. Hence a joint home loan increases the overall eligible home loan amount, which would have been beyond the eligibility of a single applicant.
Lenders consider the borrowers current income, liabilities and assets before approving any loan. Therefore, if you apply for a mortgage higher than your eligibility, in this case your loan application may get rejected. Joint Home Loan is the only possible way here by which you can increase your eligibility. The thing required here is – to include a co-borrower, who can be your spouse, parents, sibling. This will increase your eligibility and then you can get your desirable amount as home Loan. This borrowing also depends on the borrower’s individual credit profile. Here is a detailed guide on the Joint Home Loans.
Who can Apply for a Joint Home Loan?
For a joint Home Loan you need a co- borrower and this can be your spouse, your parents, and your siblings. Friends, cousins, relatives and unmarried couples are not eligible for this hence they can’t apply for this. The banks insists that the co-applicant to be co-owner of the house as well. This way the lender feels more secure and can rely on the borrowers regarding the timely repayments.
Benefits of Joint Home Loan
The joint Home Loan has many benefits and some of them are-
- Can get Higher Loan Amount
When you go with a Joint Home Loan you can certainly get Loan amount more than your eligibility. Hence it is always beneficial to go for a Joint Home Loan instead of going for an individual Home Loan.
- Tax Benefits
Tax benefits on a joint home loan can be availed by all the joint owners. But it’s important to note that ‘the ownership’ of the property is always a prerequisite to avail the tax benefit against the property. One may be a co-borrower for the Home Loan, but unless he/she is not a co-owner in the property, they can’t avail the tax benefits.
Under the section 80C each co-borrower who is a co-owner too can avail a tax exemption of INR 1,50,000. There are tax exemptions up to 2 lakhs under the section 24 b.
For example- A couple purchase a house and both of them applied together as co-borrowers for a joint Home Loan. But only husband is the Owner of the house. In this situation only husband can avail the tax benefits. Wife is not eligible for any tax exemption against that property.
- Can Buy a Bigger House
When you go for a Joint home Loan it increases your eligibility. Now you can afford a bigger house which is a dream to everyone, in your preferable location.
- Sharing the Debt Burden
This is one of the biggest benefits of a Joint Home Loan. Through a joint home loan, one can share the debt burden of the loan with your co-borrower. None of the applicant is responsible for pay the entire loan alone. Both the co-applicants of the Loan can join the ownership and both can contribute in the repayments. By doing this the debt burden is divided which gives a bit relaxation.
What are the Documents Required for a Joint Home Loan?
The Documents required for the Joint Home Loan is same as that of any other Home Loan. What makes the difference here is each and every document required needed to be submitted by both the co- applicants/ co-borrowers.
Generally, the Documents Required are-
- Document for Identity proof
- Document for Address Proof
- Bank Statement of last 3-6 months depends on lender to lender.
- Salary Slips for Income proof.
- Documents of property such as transfer of ownership paper and katha papers.
Who are Eligible for a Joint Home Loan?
The Joint Home Loan eligibility completely depends on both borrowers repaying capacity. Banks before lending generally checks for the income of each co- borrower. The loan amount can increase if the co-borrower’s repaying capacity is more i.e. if the co-borrower have a good salary.
Repayment of a Joint Home Loan
The repayment process of a joint home loan is same as that of an individual Home Loan. Cheques can be issued either from a single or a joint bank account. Another way by which repayment can be done is that the co-borrowers of the loan can share the number of EMIs between them. In this, a specific number of cheques can be given by one borrower and the remaining can be given by the other.
In case of Dispute between Co-Borrowers
In the Joint Home Loan both the co-borrowers sign an agreement with the lender that in case if any dispute happens between them, they will sort it. The Dispute will not affect the repayments. In case if any of them denies paying the EMIs, legal action can be taken against them.
This is the reason behind banks insisting the co-borrowers in the joint home loan to be co-owners too so that no dispute can happen and if any dispute happens the repayment of the home loan should not get affected.
Joint home loans work in favour of both the borrowers and the lenders. Borrowers benefit with increased eligibility and hence loan and the lender benefits with the guaranteed repayments. In case of joint home loans, it is best to add a partner as a co-borrower so that the couple can then opt for a bigger house while both enjoy the tax benefits.