Joint Loan to Enhance Home Loan Eligibility
The Indian society has already accepted home loans as a means to purchase a house.
However, the banking community is also assailed by issues such as an increase in their bad loans as well as RBI intervention on the issue of loan recovery and the methods used. Where banks were readily offering up to 90 per cent of the cost of property as a home loan, now the finance percentage has been dropped to 80-85 per cent.
The issue discussed above set off against the increasing property rates might make the dream home a distant reality. But, such does not have to be the case. For one, whether it is the public-sector or the private sector, pay packages seem to be on a hike. So, this is one of the options of translating dream into reality. There is another option which could be an easier way out. The option is that of taking a joint loan with a blood relative to enhance the home loan eligibility.
Almost all banks allow loan co-applicants for a home loan to cluster incomes and thus help increase the loan amount one is eligible for.
The co-applicants can actually combine their income and take care of all the expenses (including the home loan installment).
The definition of who can be a loan co-borrower or a co-applicant differs from banks to banks. What is uniform is the concept of blood relatives being home loan co-borrowers.
Most banks allow spouses (husband/wife) and parents as home loan co-borrowers. However, there are certain relationships which do not qualify as home loan co-borrowers.
This cautious approach is to safeguard the interests of the self ie. the bank against loan default in case a dispute arises between the joint borrowers. Under such circumstances, the income may not be pooled collectively, impact the repayment.
This is not to say that disputes may not/will not arise between spouses or between children and parents. Differences may arise between spouses too. Banks factor in these risks while computing the cost of doing business.
Most banks allow parents and children to be joint borrowers, while a smaller number of banks allow brothers to be joint borrowers.
Banks do not allow friends to be home loan co-borrowers for the same reason as above. Another community that gets impact by such a measure is that of the same-sex couples or those living-in without marriage.
Given India’s social structure, most banks provide home loans to parents-daughters or siblings (sister-sister/brother-sister) as they fear that the marriage of the female co-borrower will mean that she can no longer pool her income with her parents or siblings.
To sum it up, folks and spouses are those who qualify to be co-borrowers unconditionally. So, be together, borrower together.
Banks and their options of who can be considered a home loan co-borrower
|Bank||Relatives considered as loan co-applicants|
|ICICI Bank||Blood-relations, Spouse|
|State Bank of India||Spouse/ Son/ Daughter living with loan applicant|
|Allahabad Bank||Blood-relations, Spouse|
|Axis Bank||Mother, Father, Spouse|
|Bank of Baroda||Spouse/ Blood Relations|
|LIC Housing Finance||Blood-relations, Spouse|
|IDBI||Spouse/Parents/Brother/Sister , Fiance/Fiancee|