To have your own home is, undoubtedly, an expensive affair. To ease this huge financial burden you can secure a joint home loan which allows you to share the responsibilities of repaying the loan.
If there are co-applicants in your home loan application, it will improve your home loan eligibility. A co-applicant for joint home loan can be any of your immediate family members, be it your spouse, or parents, or siblings. As the prices of real estate continue to rise, the investment in purchasing a home can be financially cumbersome but is sure to serve as your longtime savings.
A co-applicant is, as the name implies, a person who is listed on a joint home loan application alongside the primary applicant, also known as the borrower. Although it is not required by law to have a co-applicant when applying for a house loan, having one increases your home loan eligibility and chances of having your application approved. The lender takes into account the earnings of both the applicants if you apply for a house loan with a co-applicant. Additionally, because the applicants' salaries are combined when a co-applicant applies, you have access to a high loan amount. However, when applying for a house loan with a co-applicant, borrowers must be aware of the limitations and conditions.
Co-applicants for a joint home loan must fit into particular eligibility criteria and be in certain types of partnerships, according to banks and financial institutions. These include:
There are some conditions when it comes to other relationships:
Now that we are aware of who is eligible to apply for a joint home loan, here are the combinations that are not eligible for the joint home loan.
House loan applicants frequently experience difficulty in having the home loan application accepted because of the stringent home loan eligibility requirements established by the bank or lender. The minimum income requirement, creditworthiness, repayment capacity, etc. could be some of the home loan eligibility requirements.
While it is difficult to get your home loan approved, a co-applicant improves your home loan eligibility. If you apply with a co-applicant, you may also be eligible for a larger loan amount. Also, your chances of effortlessly qualifying for a house loan increase if you apply with a co-applicant who has a good credit rating and strong repayment ability.
According to the individual contributions made towards the payback of the joint home loan, each co-applicant for a mortgage who is also a co-owner of the related house property may separately take advantage of the tax benefits.
A tax deduction of up to Rs. 2 Lakhs can be claimed for interest paid on a house loan for a self-occupied property under Section 24b, and a tax deduction of up to Rs. 1.5 Lakhs can be claimed for principal repayment under Section 80C per financial year.
Typically, the concession is worth 0.05% (5 basis points) less than what other applicants are given. Even though it might seem like a small distinction, it isn't. This is so as home loans are sometimes very expensive loans, as well as the interest part alone accounts for a sizable portion of the total cost of the loan.
Financial institutions typically take into account eligibility of each co-applicant and their capacity for repayment. Unless all co-applicants meet the home loan eligibility, the joint home loan will not be authorised. Therefore, if one of the co-applicants has a lower credit score, an excessive debt to income ratio, or fails to fulfil the lender's eligibility requirements for any reason, it could have a negative influence on your joint home loan approval and possibly lead to the rejection of your application.
It is costly to buy a house and for that you may need a loan to make the deal. A co-applicant on a home loan can be helpful in swiftly securing a loan. A co-applicant also eases the financial burden of repayment obligation. You can choose from a list of eligible family members to be your co-applicant for a joint home loan. There are also some family members who are not eligible to be co-applicants.
Disclaimer: This article is published in association with Bajaj Finance Limited and not created by TNM Editorial. Please do your own research before applying for loans from the above services and seek independent legal/financial advice if you are unsure.