‘Ek se bhale do’ (two is better than one) is a popular Hindi idiom, which implies life becomes easier when you have a partner. This same idiom also holds true when you take a home loan. Taking a home loan is one of the biggest financial decisions that you will ever make. The process can be complicated and tiring. However, it could feel less troublesome when you have someone to share the responsibility. A joint home loan helps you do just that. With a joint home loan, you can share the burden of the home loan repayment and enjoy tax benefits too.
Before we discuss the benefits, let us understand who can take a joint home loan.
Who can take a joint loan?
You can take a joint loan with an immediate family member. He/she could be self-employed or salaried. Non-resident Indians are also eligible to be a co-applicant in a home loan application. Lenders do allow you to take a joint home loan with your siblings, but they might require your co-applicant to be the co-owner of the property too.
Benefits of joint home loans
Higher loan amount
Your income is an important eligibility criteria for a home loan. Which is why if your income is not in line with the eligibility criteria, the lender could reject your loan application. When you apply for a joint home loan, the income of both the co-applicants is taken in to account. This makes you eligible for a higher amount of loan, helping you afford a bigger and better house.
Higher tax benefit
When you take a joint home loan, both the co-applicants become eligible for tax benefits separately. The repayment of the home loan principal amount is deductible under section 80C of the Income Tax Act, 1961 up to a maximum limit of Rs 1.50 lakh. Whereas, the home loan interest payment is also deductible under section 24 up to Rs 2 lakh, if your house is self-occupied. If you put your house on rent, there is no limit to the tax deduction on the interest amount. The entire interest paid is deductible. Both of the co-applicants get the benefit of these tax deductions. The tax benefit enjoyed by you and the co-applicant is in the proportion of the contribution made by both towards home loan repayment.
Better interest rates
Often lenders and banks offer special interest rates for women, that are lower than the normal home loan rates. To avail the loan at a low interest rate, a woman should be the sole or joint owner of the property and a co-applicant of the home loan. Accordingly, if you are taking a joint home loan with your spouse, it could become advantageous for you. You will need to submit the KYC and property documents showing the joint ownership of the property in such a situation.
Paying the EMIs for the home loan repayment is both a collective as well as individual responsibility. It provides flexibility for the co-applicants to pay as per their capacity. There is no compulsion on equal payments from the applicants. You can contribute a higher amount than the co-applicant and vice versa. Similarly, the manner of payment can vary too. You can either make separate EMI payments or repay through the joint bank account.
A joint home loan could be beneficial for you when you want to take a high amount of home loan for a bigger house. It also helps in sharing the repayment responsibility. In short, it is a much beneficial option than being an individual applicant.