Does Applying for a Joint Home Loan Make Sense?
Availing a Joint Home Loan can ease up your financial health at any point in time. We can all agree that taking a Home Loan can be the single biggest liability in the life of any individual. Thus applying for a Home Loan in itself requires a lot of consideration. There can be a scenario wherein you would wish to purchase a house that’s quite expensive but you may not be eligible for the loan amount that you may require to purchase your dream house. This is where a joint home loan comes into play.
You can always improve your Home Loan eligibility by adding Co-Applicants who already have an independent source of income. Financial institutions such as banks or any other lenders will always consider their income while determining your loan repayment capacity. This can work in your favour as it increases your ability to repay the home loan amount. Any immediate family member can be considered as your Co-applicant. He or she can be either self-employed or a salaried individual.
What are the Benefits of Applying for a Joint Home Loan?
When you apply for a joint home loan, you are entitled to a good number of benefits. A few of them are as follows:
- Increased eligibility to apply for a higher loan amount: As the income sources are pooled together in case of a joint home loan application, the applicants are eligible by default for a higher amount of loan. In this way, they can afford a home of their dreams.
- Better tax benefits: With the joint home loan application, the Co-applicants can hugely benefit from the tax deductions which are available on the joint home loans separately. The only condition is that the co-applicants must also be the co-owners of the property and should contribute to the repayment of the home loan.
- Special Interest Rates for Woman Co-owners: Several financial lenders offer interest rates on home loans on a differential basis in case of woman customers. It is usually a few basis points lower when compared to the normal rates. In order to enjoy the benefits of this differentiated interest rate, a woman must be the joint or sole owner of the property and must also be the co-applicant or the main applicant for the joint home loan. If a woman is the main applicant for a Joint Home Loan, then one can get discounted interest rates of up to 0.5%.
When Should You Avoid Applying for a Joint Home Loan?
In most of the situations, applying for a joint home loan makes sense. However, the following are a few of the scenarios wherein you should avoid applying for the same:
- When your eligibility as a sole applicant meets the requirement of your loan amount.
- When you have a poor credit rating due to untimely repayment of EMI or loan amount.
- When you’re currently repaying an on-going loan amount which has been availed by you to your maximum loan eligibility.
- When you are interested in purchasing a property of lower value for immediate use and when you are considering buying a bigger property for self-use or occupancy in the near future.
- When you are close to your retirement age.
How can you Repay your Joint Home Loan Amount Responsibly?
The repayment of the joint home loan amount is the collective responsibility of every co-applicant. Even if the loan is availed by more than one individual, the EMI payment has to be done by any one of the borrowers. However, he or she can opt to make the payments from a single or joint account where all of the co-borrowers are account holders. In the latter case, you can also schedule EMI payments from that account.
Documents Required For Applying for a Joint Home Loan
Essential documents pertaining to home loans such as Know Your Client (Address as well as Identity proof), income documents, and property documents are required for availing the joint home loan. These documents serve as the basis through which the financial lenders will process your home loan request. The Know Your Client (KYC) documents of each and every Co-applicant have to be submitted to the financial lender. However, the income proof of only those Co-applicants must be submitted whose income has to be considered by the lender for the appraisal of the loan.
Availing a joint home loan is not only beneficial for purchasing a better and an even larger home but also because it brings down the total cost of the home as a result of tax benefits. It also helps to reduce the burden of repayment of loan amount by sharing the financial responsibility amongst all the Co-applicants.