How a Joint Application for Home Loan can be beneficial?

by Godrej Properties Limited

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When it comes to fulfilling the dream of owning a home, availing a home loan is often the preferred choice for many individuals. While applying for a home loan solo is typical, another option brings several benefits - applying for a home loan jointly with a co-applicant. This article will explore the advantages of joint applicants for housing loans and why it could be an intelligent decision for aspiring homeowners.

What is a Joint Applicant for a Housing Loan?

A joint applicant for a housing loan refers to a scenario where two or more individuals come together in applying for a home loan jointly. These co-applicants could be family members, spouses, or friends, pooling their financial resources to increase their loan eligibility.

Advantages of Applying for a Home Loan Jointly

Increased Loan Eligibility

Lenders consider all co-applicants combined income and creditworthiness, allowing for a more considerable loan amount to get sanctioned. Joint home loan applicants can improve their debt-to-income ratio (DTI) as the combined income provides a higher loan amount without affecting DTI significantly, increasing eligibility and approval chances.

Improved Creditworthiness

Combining co-applicants with strong CIBIL scores can bolster overall creditworthiness, leading to better loan terms and lower interest rates. The positive credit history of one applicant offsets any shortcomings in the other's score, providing a more favourable impression to the lender.

Shared Financial Responsibility

Home loan joint applicants share the financial responsibility of repaying the loan. It eases the burden, making it easier to meet the monthly EMI payments.

Tax Benefits

Both can avail of higher tax benefits. Both can claim deductions on the principal and interest components of the loan under Section 80C and Section 24(b) of the Income Tax Act, respectively. Therefore, this can lead to significant tax savings for the borrowers.

Inclusion of a Non-Working Spouse

A joint loan with a non-earning spouse would not result in tax savings or an increased loan amount. It is applicable for a joint loan with non-earning parents. Nevertheless, you may enjoy reduced stamp duty and lower interest rates if you opt for a joint loan with your non-earning wife or mother. 

Conclusion: Leveraging Joint Application

Choosing a joint applicant for a housing loan can be a strategic move. From increased loan eligibility and better interest rates to shared financial responsibility and higher tax benefits, applying for a home loan jointly can make the path to homeownership easier. If you are planning to purchase a home, consider the perks of having a co-applicant by your side.

 

FAQs

Q: Can siblings apply for a home loan jointly?

A:  Eligible family members include: spouses, sons with either parent, unmarried daughters with either parent and two brothers. Nonetheless, sisters and brothers, two sisters are ineligible as co-applicants. For brothers to apply, they must reside in the same house or be co-owners.

Q: Can friends apply for a joint home loan?

A:  Friends can not apply for a joint home loan.

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