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Benefits Of Taking A Joint Home Loan

Housing Finance Tips & Advice 03-10-2022 | 5 min read

Owning a home in most cases is a once-in-a-lifetime investment and a collective dream of a family. There are several factors such as income, age, repayment capability, etc. which are considered by a lender while approving the home loan Many hands make light work holds true when it comes to a joint home loan. The involvement of multiple applicants as co-borrowers eases the repayment of loans and increases the chances of getting a higher loan amount.

What is A Joint Home Loan?

A joint home loan is a home loan taken with a co-borrower to share the financial burden and to get better home financing options. A co-borrower also known as a co-applicant is an immediate family member or a relative with whom the joint home loan is taken. All co-applicants can claim tax benefits under a joint home loan. Unless the co-applicant is a sibling or a relative, it is not mandatory for the co-applicant to be the co-owner of the property you wish to buy. However, all the members mentioned in property documents as co-owners have to be the co-applicant for a home loan.

Who can Co-apply?

Before we understand who can be a co-applicant when applying for a joint home loan. It is important to be able to differentiate between a co-owner and a co-applicant. A co-owner as established by the property documents is a joint owner of the property. On the other hand, a co-applicant can be any immediate family member who has a steady income flow. When applying for a joint home loan, it is mandatory to have a co-owner as a co-applicant while vice versa is not mandatory.

Benefits Of A Joint Home Loan

There are several benefits associated with a joint home loan. Some of the key benefits of a joint home loan are mentioned below.

Higher loan amount

The more the merrier holds true when it comes to a joint home loan. There are multiple earning members as co-applicants in case of a joint home loan. A lender considers the income of both the co-applicants while deciding the loan amount to be sanctioned. The more the income, the higher would be the amount of loan sanctioned by the lender. The higher loan amount gives you the opportunity to go for that dream home that you might not have been able to afford with a regular home loan.

Ease of repayment

One of the primary factors considered by a lender while approving the loan is the repayment capability of the borrower. In a joint home loan, there are multiple borrowers as co-applicants for the same loan. The EMIs repayment is shared among the co-applicants which reduces the burden on each member. This could also help in paying higher EMIs, reducing the loan tenure and the interest paid to the lender. Higher EMIs and shorter loan tenure increase your chances of becoming debt-free quicker.

Tax relaxations

A joint home loan allows the co-applicants to claim tax benefits separately. Under Section 80C and Section 24 of the Income Tax Act, a tax benefit up to INR 1.5 lakh on the principal amount and INR 2 Lakh on the interest amount can be claimed by the co-applicants. Please note that these relaxations can not exceed the interest amount paid to the lender.

Special benefits for women

There are home loan benefits for women if one of the co-applicant is a woman then she can avail an additional benefit of lower interest rates offered to women by lenders.

Bottom Line

A joint home loan with your trusted family member as a co-applicant makes the process of acquiring your dream home more convenient and beneficial as compared to a normal home loan. The ease of repayment, higher loan amount, and sharing of financial burden are some of the benefits you reap when you opt for a joint home loan.

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