With the increasing property prices, it is getting more and more difficult to own the house of our dreams. Thanks to the home loans which helps millions to turn their dream into reality. The search for our perfect house is not easy, as we want it to have all the facilities. A bigger and more spacious home is something that lingers in every home buyer’s mind. And sometimes it may happen that your individual income is not enough to make that expected amount of home loan granted. But, don’t you worry! your dream house can still be afforded if you get a co-borrower for your home loan. Adding a co-borrower to your home loan makes it a joint home loan increasing your home loan eligibility and affordability both.
Who can be a co-borrower for your home loan?
A co-borrower is a person with whom you can take home. Here are the 5 co-borrowers of a home loan.
1) Married Couple
2) Father and son
3) Father and unmarried daughter
4) Mother and unmarried daughter
5) Brothers
Friends, sisters, cousins, brother – sister and unmarried partners are generally not eligible for a joint home loan.
Advantages of a Joint Home Loan
Higher Eligibility: A joint home loan enhances your eligibility for getting approved for a home loan. This is because a joint home loan is sanctioned based on the combined income of both the applicants. So with a higher income, you can get a higher loan amount. If your net take-home salary is ₹ 1 lakh then banks will generally offer him a home loan for which the EMI can be ₹ 40,000(approx). But when the same person applies for a joint home loan with the total take-home of ₹ 1.5 lakhs he will be eligible for getting a higher amount of loan.
Tax Benefit: Tax benefit is another most important reason for which a Joint Home Loan is advised. Generally, a home loan borrower is allowed to have a tax deduction of ₹ 1.5 lacs under section 80C and ₹ 2 lacs under section 24 of the Income Tax Act. But when you apply for a home loan with a co-borrower, both the borrowers are eligible for separate deductions. This means both can together avail a tax benefit of 3 Lacs under section 80C and 4 Lacs under section 24. With these savings on tax, one can save up to 7 lacs in total which is a great amount. However, it has to be noted that if a co-borrower is not a co-owner of the property then he/she cannot enjoy this tax benefit.
Sharing the Debt Burden: With a joint home loan, you can share the debt burden with your partner. And if your co-borrower is also the co-owner of the house, it can work even better. Both the co-applicants can enjoy the ownership of the home without much financial pressure.
Stamp Duty: In many states, there is a special privilege for female house owners. This special benefit is paying less on stamp duty charges. The stamp duty charges get lowered by 1% to 2% depending on different states. This step has been taken by the State Government to encourage women empowerment.
Interest Rate: This is also a step taken by the government and banks to encourage women ownership in properties. This includes providing special offers on home loan products and charging lower interest rates for it. Presently the rate of interest on a home loan starts from 7.35- 7.60%. But if your co-applicant is a female, then you can enjoy the interest rate as low as 7.30% which is the least ever. Saving 0.5% in interest while availing a Joint Home Loan means saving a decent amount by the end of the tenure.
What documents are needed to apply for a joint home loan?
Here are the documents which you need to produce while applying for a joint home loan.
- Address proof
- ID proof (PAN, passport, electricity bill)
- Income proof (form 16)
- Bank statements of both the applicants
- Proof of co-ownership of the property
- Income tax returns
- Share certificate from builder/society
What if the borrower’s split?
In the case of death/divorce/ dispute, there may be chances of defaulting the loan. To avoid such unwanted situations the co-borrowers must enter into a legal liability agreement which clearly tells the liability of each borrower. It is advisable to take individual term life insurance and home loan insurance to reduce the financial burden on the co-borrowers in case of his/her demise.
Taking a joint home loan is beneficial as it helps you to own a much bigger house which was not possible with a regular home loan. Moreover, availing a joint home loan also saves your lot of money by providing you extra benefits on tax savings and by making you eligible for a lower interest rate.
