Benefits of Joint Home Loan

A dreamy abode is a once in a lifetime opportunity for you to buy, set up and enjoy. But with it comes a high price tag. Naturally, your own space also becomes integral to your lifestyle. To realise your dream home, you make a checklist of things to consider. The most significant determinant (of these) is affordability. The cost of a house ascertains the size, location, quality and feasibility to purchase it. With an increase in residential property prices, the majority of the home buyers are opting for home finance from financial institutions and banks.

The home loan sanction amount and applicable interest rate, depend on numerous crucial factors such as age, income, repayment credibility, and tenure. You also need to consider if you can afford the EMIs. If you’re looking to improve your chances of getting a loan and reducing your financial responsibility, it is advisable to have a co-applicant. There is an array of joint home loan benefits you need to understand. However, before that, let’s see who a co-applicant is.

Who can be a co-applicant? 

Banks and lending companies offer the option to include a co-applicant to apply for a home loan. A maximum of six co-applicants can form part of the loan. The list includes your spouse, parents and siblings. 

Benefits of joint home loan

Tax Advantages

Both the borrowers can avail tax benefits when they apply for a home loan jointly under the Income Tax Act. Under Section 24 (b), you can avail tax deductions against the interest paid. The deductible amount is up to INR 2 lacs. Section 80 C of the Income Tax Act permits you to claim tax benefits against the repayment of the principal amount. The amount under Section 80 C is up to INR 1.5 lacs. Each of the co-applicants can avail both these tax benefits individually. Hence, totally an amount of INR 3 lacs under Section 80 C and INR 4 lacs under Section 24 (b) is exempt.

Additionally, the cost of registration, stamp duty and supplementary miscellaneous fees are split between the holders. The joint home loan tax benefits not only prove to be cost-effective for a married couple but also strengthens their responsibility towards each other. It is always advisable to have a 50: 50 ratio for splitting the loan amount. 

Increased Loan Eligibility

Two is better than one. This saying applies when you intend to apply for a joint home loan. It is also advisable to submit the requisite KYC documentation- identity and address proof, income statements, property documents and investment statements. These are the fundamental essentials that the lender assesses before sanction of the loan amount and interest rate. Increased loan eligibility will also result in income tax benefits on joint home loan as both the applicants can enjoy tax exemptions.

Repayment Responsibility

An added advantage of a joint home loan is the repayment of the principal and interest. The EMIs can be split between both the applicants. It payment can be made singly or jointly via various modes of transfer, that is cheque or electronic clearing. Though the collective effort of jointly repaying the loan is a boon for both the applicants. It is one of the vital joint home loan benefits. 

Special Rates for Women Co-applicants

Having a home loan joint holder as a female proves to be extremely beneficial. You can enjoy discounted interest rates and a lower percentage of stamp duty. 

Majority of the financial institutions and banks offer the female co-applicant a few basis points lower than the usual interest rate. It is a discounted rate. Additionally, the Government has rolled out a mandate that the stamp duty levied on female loan applicants is lower than their male counterpart. Most states like Delhi, UP, Haryana offer up to 1% to 2% lower stamp duty charge. It further enhances the joint home loan benefits in income tax and saving of funds.

A joint home loan is a practical option in today’s fast times. Both the applicants can contribute to set up their dream home and reduce the burden off each other. The fact that it is a joint responsibility makes it necessary that both the co-borrowers manage their part of the share adequately. The benefits of a home loan are aplenty and will only prove a boon to purchase your dream home. 

Related Articles:

• Joint home loans: To do or not to do?
• Benefits of Joint Home Loans
• How to claim tax benefits on joint home loans?

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