Joint Loan to Enhance Eligibility
Who can take a joint loan and how?
Home loan eligibility can be enhanced by clubbing the incomes of relatives with yours. This is one of the main reasons why one would want to opt for a joint loan.
Clubbing of incomes of relatives:
Home loan eligibility is calculated by clubbing your income with your relatives. All banks allow clubbing of the spouse’s income to work out loan eligibility. In such cases, they insist on making the spouse a joint borrower (or co-borrower).
The basic premise behind using pooled incomes for calculating loan eligibility is that both parties will actually combine their income and pay off all expenses (including the home loan installment).
However, banks are selective in extending this concept of pooling of incomes to other relations.
Some banks allow parents and children to be joint borrowers, while a smaller number of banks allow brothers to be joint borrowers. The reason for the restrictions is that in the event of some dispute arising between the joint borrowers, the income stops getting pooled and there may be a problem in paying the loan installments.
Of course, disputes may arise between spouses too. Banks factor in these risks while computing the cost of doing business. This is the reason is why banks do not allow friends to be joint borrowers. This can pose a problem for a small community of couples living together without marriage or even same-sex couples.
The amount of loan offered by the bank differs according to the borrowers income profile and repayment track-record.
As a rule of the thumb, you may get 4 times the annual gross income as a housing loan.