By 
Buying a new home is a huge financial commitment, and it requires a substantial investment. But, with the easy availability of home loans, it has become easy to afford to buy a home. Today, many banks in India allow home loan borrowers to apply for a joint home loan. You can apply for a home loan with a co-applicant. The applicant can be your immediate family member. There are many benefits of applying for a joint home loan, which are discussed below:
- Enhances Loan Eligibility:
Since the income of both applicants is considered, you can apply for a higher loan amount. Make sure that your co-applicant has a stable job and steady income to increase your loan eligibility.
- Better Interest Rates:
Female applicants can get lower interest rates as compared to male borrowers. Therefore, taking a joint home loan with women can bring down interest rates. A lower interest rate results in a lower EMI and reduces your monthly outgo towards loan repayment. Even a 1% reduction in the interest rate can lead to significant savings in the long run.
- Higher Tax Benefits:
Under Section 80C of the Income Tax Act, tax benefits can be claimed for a maximum limit of Rs. 1.5 lakhs for the principal component of your EMI. Since both co-applicants can claim this benefit individually, you can get a total tax deduction for a maximum of three lakhs.
Under Section 24 of the Income Tax Act, interest payments for housing loans enjoy a tax deduction for a maximum amount of two lakhs in case of self-occupied property. Both applicants are eligible for this tax benefit, and tax deduction claims can be made on interest payments of up to four lakh in total.
Adding a co-applicant increases your tax benefits considerably. But to avail these benefits, the co-applicants need to be also co-owners of the property. Income tax exemption can be claimed in proportion to each applicant’s share in the property. If the property document does not contain explicit details of share, an equal share is assumed.
- Shared Responsibility:
In case one applicant faces financial difficulty, the other applicant can step in and take care of the repayment. Sharing the burden of EMI payments helps the applicants avoid late payments or defaulting on the loan. This, in turn, can prevent any penalty charges the financial institutions can levy for not paying your EMI on time.
- Purchase of a Better House:
It is a universal fact that quality houses tend to be expensive. With a smaller loan amount, borrowers must compromise and look for houses that fit their limited budget. Since joint home loans increase your loan eligibility, you can afford to buy better houses that are spacious and located in prime locations
Family members applying for housing loans together lessens the financial burden of an individual applicant. The tax benefits of joint loans and the increased loan eligibility can help the applicants purchase a house according to their preferences.
Comments