Is It Beneficial To Avail A Home Loan With A Co-Borrower?
With the proliferation of the borrowing industry in India, a significant number of prospective homeowners are opting to make advances to pay for their acquisition instead of depleting their own savings. It offers various benefits, including a flexible repayment tenor, affordable EMIs, etc.
Unfortunately, as the primary source of funding for buying a property has become a home loan, most customers tend to apply for a higher loan amount to meet the increasing cost of residential properties. Financial institutions do not sanction advances that might burden your budget as they check an applicant’s FOIR and income before disbursing credit.
In such circumstances, opting for a joint home loan with your partner increases the chances of securing a higher credit amount.
Why Apply for a Joint Housing Loan?
Some of the benefits of availing a joint home loan include:
(A) Taxation Benefits
As far as taxation is concerned, availing joint housing loans can be beneficial as both the co-applicants are eligible for tax exemptions. Tax deductions are applicable in accordance with both Section 80C (against the repaid principal) and Section 24 (b) (against the repaid interest) of the Income Tax Act.
When you apply for a joint loan with a co-borrower, every assessee can claim tax benefits of joint home loan in equal proportion both on the principal and interest part. Both co-borrowers can avail of a tax exemption of up to Rs. 3 Lakh in accordance with Section 80C as well as Rs. 4 Lakh in accordance with Section 24 (b) as the combined limit. These tax benefits on a joint home loan significantly reduce the overall cost of the loan.
(B) Easier Repayment
The benefits of a joint home loan extended to the repayment process as well. A joint home loan significantly improves the overall repayment capability as both individuals make payments towards the outstanding debt. Similarly, a credit facility allows co-borrowers to share the number of installments between them. They could also decide the number of cheques to be issued by one applicant and the balance could be made by the other.
Another significant benefit of repayment mode is where all the installment payments are made by one applicant followed by a refund of his/her share from the other applicants. This makes a joint home loan one of the most sought-after financial investments in India amounting to 33% of the total home loans availed in FY 2018-19.
You can consider availing a joint housing loan from lenders that offer advances at competitive rates. However, check your joint home loan eligibility and documentation required to avail such advances. Furthermore, you can benefit from pre-approved offers if you are an existing customer.
These pre-approved offers make the process of availing loans quick and hassle-free. They are applicable to home loans, business loans, personal loans and a host of other financial products. You can check your pre-approved offer by sharing only some essential details online.
(C) Special Interest Rates For Women Applicants
Leading lenders at times offer a differentiated a joint home loan interest rate for women applicants. This lending rate is usually a few basis points lower than the normal housing loan rates. To avail of this benefit, a woman has to be a joint or sole owner of the property or co-applicant of a housing loan.
(D) Required Documentation
Learning everything about joint home loan eligibility and documentation requirements is necessary before applying for the same.
(1) For salaried professionals
You need to furnish the following documents:
- KYC documents like identity and residential proof.
- Salary slips for the past 3 months.
- Copy of bank account statements for the last 6 months.
- Proof of employment at an MNC, public or private limited organization.
(2) For self-employed individuals
Self-employed individuals need to furnish the following documents for a joint home loan –
- Proof of Identity and residence such as Voter ID card, Aadhaar card, etc.
- Copy of previous 3 years IT returns attested by a CA.
- The last 3 years of Balance Sheet audited by a CA.
- Copy of bank account statements for the past 1 year.
- Form 16A (if applicable).
- Proof of a minimum of 3 years of business vintage.
- Copy of trade license.
- Copy of partnership deed if applicable.
Concluding from above, a joint home loan is definitely beneficial as compared to standard housing loans. Availing a home loan with a co-signer not only helps you to acquire a larger loan amount but also brings down the overall cost of loan due to the increase in tax benefits. Similarly, the shared responsibility in servicing a loan also brings down the loan repayment burden by a significant margin.