Advantages of a Joint Home Loan
Buying a home is not just a major milestone in life but it is also one of the most significant investments you may make. And, while you may want to buy a big house so that everyone in the family has their own space, the property you choose may be hugely influenced by affordability and budget.
As many financial organisations in India offer a variety of home loan offers and even the housing loan interest rates are highly competitive, the amount you borrow mainly depends on your eligibility. Generally, the housing finance companies have strict norms for eligibility, they decide the maximum amount you can borrow based on your age, income, profession, debts, repayment capacity, etc.
One of the best ways to improve your home loan eligibility and get a higher loan is to apply for a joint home loan with any of your earning family. The co-applicant can be a salaried employee or a self-employed professional. When you add a co-applicant to your home loan, the lenders consider the income level of all the applicants’ income while assessing your repayment capacity. This in turn increases your eligibility to get a higher loan.
Benefits of applying or a joint home loan
One of the most obvious benefits of a joint home loan is that it increases your home loan eligibility. By combining the income of all the applicants, you can showcase high income to the lender and get a higher loan. This means you can easily afford buying a bigger and better home at any location of your choice.
It is a known fact that a home loan is an excellent tax-saving instrument. You can avail of tax benefits on the repayment of the principal, and the interest amount as well as on the stamp duty under different sections of the Indian Income Tax Act. And when you apply for a joint home loan, all the co-applicants can avail of the tax benefits individually. This means together you can enjoy higher tax benefits than in the case of a single home loan applicant.
Individually, you can enjoy tax benefits up to Rs. 1.5 lakhs on the repayment of the home loan principal amount under Section 80C of the IT Act. You can also get tax benefit up to Rs. 2 lakhs on interest repayment. However, you must know that the extent of the tax benefit you can enjoy is in proportion to your individual contribution to the loan repayment.
While you can apply for a joint home loan with any family member of your choice, it is better to apply for a joint loan with a female family member as many lenders offer special discounts on housing loan interest rates for women borrowers. The home loan interest rate for women is usually a few points lower than the interest rates offered to other borrowers.
However, to take advantage of this tax benefit, you must compulsorily register the property in the name of the female member either as a sole owner or co-owner.
Applying for a joint home loan is an excellent way to afford a bigger and better house. Also, it allows you to lower the overall home loan cost because of the higher tax benefits. Lastly, a joint home loan allows you to share the repayment responsibility with the co-applicant and you can manage the EMI payments better.