Top benefits of joint home loan

With rising property costs, owning the home of our dreams is becoming increasingly challenging. Thanks to home loans, which enable millions of people to realize their dreams. The search for our ideal home is difficult since we want it to have all of the amenities. Every house buyer fantasizes about having a larger and more spacious home.

And it’s possible that your personal income is insufficient to qualify for the projected amount of a home loan. But don’t be concerned! If you find a co-borrower for your home loan, you can still finance your dream home. When you add a co-borrower to your home loan, it becomes a joint loan, which increases your eligibility and affordability.

Who is eligible to be a co-borrower on your home loan?

A co-borrower is someone you can take home with you. The 5 co-borrowers on a home loan are listed below.

Married couple
Father and son
Father and unmarried daughter
Mother and unmarried daughter
Brothers

Friends, sisters, cousins, brother-sister relationships, and unmarried couples are typically not eligible for a shared home loan.

Advantages of a joint home loan

Higher Eligibility:

A shared home loan improves your chances of getting approved for a mortgage. This is because a shared house loan is approved based on both applicants’ combined income. As a result, if your salary is higher, you will be eligible for a higher mortgage. Banks will usually provide him a home loan with an EMI of up to 60,000 (approx) if his net take-home income is 1.5 lakh. However, if the same person files for a joint home loan with a total take-home of 2 lakhs, he will be qualified for a larger loan. Check your eligibility using the home loan eligibility calculator.

Tax Benefits:

Another key incentive to getting a joint home loan is the tax benefit. A home loan borrower is generally eligible for a tax deduction of 1.5 lakhs under section 80C and 2 lakhs under section 24 of the Income Tax Act. When applying for a home loan with a co-borrower, however, both borrowers are subject to separate discounts. This indicates that both of them can earn a tax benefit of 3 lacs under section 80C and 4 lacs under section 24 if they work together. One can save up to 7 lacs in total with these tax reductions, which is a significant sum. It should be noted, however, that if a co-borrower is not also a co-owner of the property, he or she will not be eligible for this tax benefit.

Sharing the debt burden:

With a shared home loan, you and your partner can split the debt burden. It can work even better if your co-borrower is also a co-owner of the home. Both co-applicants will be able to enjoy homeownership without having to worry about money.

Stamp Duty:

There is a specific advantage for female homeowners in many states. This unique benefit entails paying lower stamp duty fees. Depending on the state, stamp duty rates are reduced by 1% to 2%. The state government has taken this move to promote women’s empowerment.

Interest Rate:

The government and banks are also taking steps to encourage women to become property owners. This involves offering unique home loan offers and charging cheaper interest rates for them. Currently, the interest rate on a home loan ranges from 6.40 to 6.80 percent. If your co-applicant is a woman, however, you can get a rate as low as 6.35 percent, which is the lowest rate ever. By saving 0.5 percent in interest while taking out a Joint Home Loan, you will have saved a significant sum by the end of the term.

Documents needed for a joint home loan

The following are the documents you’ll need to apply for a shared home loan.

Address proof
ID proof (PAN, passport, electricity bill)
Income proof (form 16)
Bank statements of both the applicants
Proof of co-ownership of the property
Income tax returns
Share certificate from builder/society

What if the borrowers split?

There is a danger that the loan will default in the event of death, divorce, or a disagreement. To avoid such unpleasant scenarios, co-borrowers must sign a legal responsibility agreement that spells out each borrower’s responsibilities. Individual term life insurance and house loan insurance are recommended to decrease the financial burden on co-borrowers in the event of death.

Taking up a combined home loan is advantageous since it allows you to purchase a considerably larger home than you could with a traditional home loan. Furthermore, taking out a joint home loan saves you money by providing you with additional tax benefits and making you eligible for a cheaper interest rate.