The Indian real estate market is expected to reach $1 trillion by 2030. Even in a fluctuating economy, this sector is expected to contribute more than 11% of the nation’s GDP by 2020.
In such a booming sector, buying a home/apartment solely from savings and investment returns can be difficult. Real estate prices are rising at a faster rate than what most investment avenues can offer.
Availing a joint home loan can arguably be considered as the most financially suitable way to purchase a residential property. Borrowers should have a proper idea about it and know-how joint application can help them benefit on multiple grounds.
What is a Joint Housing Loan?
More than one person takes a joint housing loan, and the applicants are equally responsible for the repayment of the loan.
Who can take a Joint Housing Loan?
Immediate family members are considered as co-applicants. Parents, spouses, and siblings can apply for such a loan with you. Friends or others are not allowed to be co-applicants. Often, financers prefer co-applicants who are also co-owners of the property to be purchased and mortgaged for the loan as a guarantee for repayment.
What is the difference between a co-owner and a co-applicant?
In simple words, a co-owner is someone who jointly owns a property with one or more individuals. But, a co-applicant isn’t necessarily a co-owner. Only their contribution to obtaining a loan is essential.
In case of applying for a secured credit such as home loan, a co-owner may be required to be the co-applicant.
Benefits of a Joint Home Loan
Higher loan amount – Repayment capability of both or all co-applicants are considered to avail the loan. Thus, joint home loans can offer a higher loan amount for the borrowers and allow for a larger residential property purchase.
Reduced burden – In a few cases, a borrower is faced with financial distress and fails to follow the repayment schedule. With shared responsibility, joint home loans are less prone to such delinquency. Either way, it is always advisable to avail the benefits of calculating EMIs for better financial planning. Note that non-repayment of dues will affect the CIBIL of both or all applicants of a home loan.
Higher tax-benefits – From the point-of-view of the tax benefits of home loans, applying for a joint home loan is rather beneficial. The Government of India has taken various measures to make loans less taxable and instead more beneficial for borrowers.Tax benefits on home loans include –
Under Section 80C, an individual can claim tax exemptions of up to Rs.1.5 lakh per annum on their home loan principal paid.
Section 24(b) enables a borrower to claim exemptions of up to Rs.2 lakh on home loan interest payments per annum.
Section 80EE enables tax exemptions of up to Rs.50,000 per year on the interest paid for a home loan provided the property is less than Rs.50 lakh at the time of loan sanction, the sanctioned loan amount is less than Rs.35 lakh, and no other property is owned by the borrower as on the date of loan sanction.
Note that all joint home loan borrowers can separately avail these tax benefits.
Special interests for women co-owners – Some financial organization offers a special interest rate for women applicants. To avail this scheme, the applicant has to be the sole owner or the co-owner of the property. The applicant has to be the only applicant or co-applicant of the joint home loan.
Know how to avail better home loan interest rates and claim for these tax benefits to ease the financial burden of the loan.
Certain lenders provide affordable interest rates and other borrower-centric benefits such as no-charge part prepayment and foreclosure, property dossier, etc.
Avail a joint home loan and benefit from higher loan amounts, lower interest payable, and substantial tax exemptions. Refer to leading lenders for additional repayment-friendly benefits to help you reduce the loan burden.