Brief Guide On The Advantages Of Taking Out A Joint Home Loan

Planning to buy a property with a home loan? If yes, you are an individual who loves comfort without stretching the budget. Comparing lenders to find low interest home loans is a conscious effort to find the best deal to purchase a house. However, many individuals face a dilemma regarding repaying their home loan EMIs. 

When an individual looks for a home loan alone, they often find lenders offering low loan amounts at high interest rates. In that case, they may improve their eligibility by taking out a joint home loan with their spouse, parent, or a family member. Doing that solves most issues as both the co-applicants share the responsibility of repaying the loan. Taking out a joint loan has several other advantages. We have explained a few here.

Improved Eligibility for a Higher Loan Amount

Adding an earning co-applicant with a high income and a decent credit score increases the chances of loan approval. The lenders consider both co-applicants revenues and credit ratings while deciding their loan amount. As such, an aspiring homebuyer becomes eligible for a higher joint loan amount than an individual loan application. Consequently, a higher loan amount increases their budget to purchase a better and bigger home available through a joint loan.

Lower Interest Rate

Male applicants may add a female co-applicant to their joint loan to get a subsidy on their home loan interest cost. The only condition is that they must add the same female applicant as the property’s co-owner as well. The female co-applicant can be anyone in their family, including their mother or spouse. Most lenders perceive female borrowers as responsible payers and offer them low interest home loans. Remember, a difference of only a few percentage points leads to substantial cost savings, considering the enormous loan amount and extended repayment terms of home loans.

Ease of Repayment

In joint home loans, both the co-applicants share the responsibility of repaying the EMIs. So, the EMIs put less burden on each applicant’s income and financial obligations. Besides that, two individuals paying the same loan’s EMIs allows them to spend more each month, so they can opt for a shorter tenure to repay the loan sooner. Therefore, a joint loan reduces both co-applicants financial obligations and boosts their chances of getting debt-free quicker.

Using a home EMI calculator available on most lenders’ websites helps choose a loan tenure with budget-friendly EMIs. Besides that, the co-applicants may open a joint bank account and activate the e-mandate to get the EMIs deducted from it automatically each month. It is a lucrative trick for those taking a joint loan with their spouse. However, avoid co-applying for a loan if one of them is retiring soon, has a bad credit score, or is already indebted heavily. Loan rejection based on these factors may affect both co-applicants credit scores and loan eligibility.

Cost-Saving on Stamp Duty

A joint loan with a spouse is an excellent way to reduce stamp duty. The government offers discounted stamp duty to female homebuyers, encouraging and empowering women to buy property. 

Significant Tax Benefits

Another significant benefit of taking a joint home loan is the tax benefits available to each co-applicant separately. To avail of these tax benefits, both the loan co-applicants should also be joint property owners and actively contribute to paying the home loan EMIs. Some tax benefits that home loan co-borrowers may avail of include the following:

• Section 80C of the Income Tax Act, 1961 gives a tax reduction of Rs. 1.5 lakhs on the home loan’s principal amount.
• Section 24 of the Income Tax Act, 1961 gives a tax reduction of up to Rs. 2 lakhs on the interest payments if the co-borrowers self-occupy the property. If they let it out, they are eligible for a tax deduction on the entire interest payment.

Each loan co-applicant can claim the above tax benefits individually according to the percentage of their contribution to pay the monthly EMIs.

Co-applying for a joint home loan provides several benefits that help the buyers acquire a better home. Besides that, they also reduce the property’s overall cost by increasing their tax benefits and paying off the loan sooner. Moreover, sharing the burden of loan EMI payments helps them manage their finances and cater to other financial obligations more efficiently. So, apply for a home loan with a co-applicant and get low interest home loans to enjoy these benefits.