Understanding If the Joint Home Loan Is Beneficial in India

Market research reveals that around 80% of home buyers end up purchasing a house, which exceeds their initial budget by 40%. It is a substantial sum that often demands additional financial assistance to reduce the economic burden. This 40% can cause a significant strain on a homebuyer if he/she does not have a sound plan to arrange funds. Here, availing a joint home loan is the smartest way to finance your home purchase.    

What are joint home loans?

Joint home loans are advances availed by two or more co-applicants of the same family together with equal responsibility to repay it on time. Financial institutions and NBFCs always prefer to extend this credit as it is less risky. 

When you avail of a joint home loan, the lender takes into consideration both the applicants’ income and credit score. So, if your co-applicant holds a healthy CIBIL rating of 750 or above, along with a steady income – your joint home loan eligibility automatically increases as there are minimal chances of defaulting. 

The following individuals can be co-applicants:

  • Spouse
  • Parents 
  • Siblings 

However, you must always use a joint home loan eligibility calculator online to check if you qualify for the credit facility. 

Benefits of availing a joint home loan

There are numerous advantages associated with joint housing loan over a standard housing loan. For instance –

1. Higher loan amount 

Lending institutions evaluate the borrower’s repayment capacity in determining the credit amount. If both you and your co-applicant possess a stable income and hold a good credit score – you could be eligible for a substantial loan amount. Besides, you can also secure a lower home loan interest rate.     

2. Special interest rates for women applicants

Most financial institutions offer subsidized interest rates if a woman is a primary applicant. It is generally lower than the standard housing loan interest rates.   

Additional Read: Know These Smart Ways to Save Taxes on Your Home Loan

3. Tax  benefits 

You can also avail of tax benefits on joint home loans. In case of a joint home loan, each of the applicants is eligible for tax benefits on their contribution towards repayment. 

  • Under Section 24(b) of the Income Tax Act, each of the co-applicants can claim tax benefits of up to Rs. 2 Lakh on the interest payouts. Note that, the maximum tax exemptions cannot exceed Rs. 4 Lakh. 
  • The co-borrowers can also claim tax rebates of up to Rs. 3 Lakh per year on the principal component of your EMIs – under Section 80C. 

Make sure you estimate your monthly outgo by using your lender’s home loan EMI calculator online. By putting in the details like loan amount, interest rate and tenor – you can get a detailed output of your monthly liability. 

Now that you have a complete guide on the benefits of a joint home loan take a look at the documents required during the application process.   

Documents required for a joint home loan

While applying for a joint housing loan, you need to furnish these following documents:

  • KYC documents
  • Identity and address proof 
  • Income proof such as bank account statements and salary slips
  • Proof of co-ownership of the property 
  • Property documents 

A joint home loan can lower your financial burden substantially during a house purchase. These benefits that come with this credit facility make it an attractive financial option for prospective homebuyers 

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