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Why Take a Joint Home Loan? Research Team | Posted On Monday, November 11,2019, 04:50 PM

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Why Take a Joint Home Loan?



Want to buy that dream house? Why not take a joint home loan with a spouse? You not only get that dream house, but there’s also no pressure of EMIs and you save a lot in tax.

These are some of the benefits of availing of a joint home loan.

  • It increases your home loan eligibility as two salaries are definitely better than one.
  • You can buy a bigger home. This is great if your family is of a larger size.
  • Get your home in a better location. As home loan eligibility increases, you can afford a better place.
  • You and spouse both enjoy tax benefits as the burden of repayment gets shared.

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Why Take a Joint Home Loan?

Banks don’t insist on a co-applicant when sanctioning the home loan, but it’s great if you have one. Joint home loans are a boon for many citizens of India. You and spouse share the burden of repaying the home loan.

See Also: Why is Your Home Loan EMI Still High?

Increase Home Loan Eligibility:

If you have low income, a poor credit score and are repaying other loans, it might be tough to get that home loan. This is where a joint home loan boosts loan eligibility. If your spouse has a good income, a high credit score, and a strong repayment capacity, the home loan gets sanctioned easily. Lenders look at the combined repayment capacity when sanctioning the home loan.

Get tax Benefits:

Home loan principal repayment enjoys tax benefits under Section 80C up to Rs 1.5 Lakhs a year. The home loan interest repayment enjoys tax benefits under Section 24 up to Rs 2 Lakhs a year for self-occupied property. What’s great are you and spouse can both avail tax benefits individually when repaying the home loan, provided you are both co-owners of the property. If you let out the property, the entire home loan interest would be eligible for a tax deduction.

(Co-owner is the joint owner of the property. Co-applicant does not have to be a part-owner of the property. Only the income of the co-applicant is considered during loan appraisal).

The actual home loan tax benefit which is enjoyed by each co-applicant is in proportion to the contribution made towards repaying home loan principal and interest. You can plan the tax benefit, depending on what proportion of the home loan, you and spouse repay.

A proposal was made in the Union Budget 2019 to increase the tax deduction which can be claimed on home loan interest from Rs 1.5 Lakhs to Rs 3.5 Lakhs a year. This is only for houses valued up to Rs 45 Lakhs. You get this deduction on home loans availed up to March 31st, 2020. This translates to a total benefit of Rs 7 Lakhs over a 15-year tenure.

See Also: How to Select The Best Home Loan in India? What Should I Consider?

Women Co-Applicants Pay Lower Home Loan Interest Rates

You can get home loans at concessional interest rates if you apply with a female applicant. Women get home loans at a 0.05% lower interest rate than males. But, to get this home loan rate concession the woman applicant must be the co-applicant and the co-owner of the property.

Women Have Lower Stamp Duty

It would be wise to register the property in your wife’s name. This would be either as a sole or joint owner to enjoy reduced stamp duty charges. The stamp duty charges vary across states, while some states offer 1-2% lower stamp duty charges for women. You can claim stamp duty and registration fees as a tax deduction under Section 80C up to Rs 1.5 Lakhs a year. This deduction can be claimed only in the same year in which the expenses were incurred.

See Also: How to Select the Best Home Loan?

Points to Remember When Availing Joint Home Loan:

  • Repaying home loans is the individual and collective responsibility of all co-applicants who avail the home loan. You can repay the home loan any way you want. This can be done separately through EMI payment or even though a joint bank account.
  • The proper home loan documents like KYC (address and identity proof) and also property documents like title deed, sale deed, encumbrance certificate are necessary for the quick sanctioning of home loan. The income proof of all co-applicants whose income is considered when sanctioning home loans must be submitted.

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