joint home loan

As every home buyer would know, buying a home is often once in a lifetime investment for the average middle class citizen. The good thing about this is that one can also make joint home loan applications by which they can apply for a loan with their spouse, their siblings or any other relative. This trend is also increasing in popularity because of a number of reasons.

  • To start with, the eligibility for higher loan amount increases as the income of both the applicants would be considered for the home loan.
  • Secondly, both the applicants would have the option of availing higher Joint Home Loan tax exemptions independently under Section 80C of the Income Tax Act. The applicants would be independently eligible to claim principal deduction to a maximum extent of Rs 1.50 Lakhs under 24b of ITA. They are also eligible to claim interest deduction up to Rs 2 Lakhs as per the ownership.
  • As the tenure of the loan is longer, risk mitigation is also ensured in case any uncertainties arise during repayment, and with two borrowers, there is greater assurance of the money being returned. Interests are also lowered for women applicants, whether they are the sole owner or the joint owner of the property.
  • A joint loan can be applied for with a spouse, parent, child or sibling, and technically there is no cap on the number of applicants. A minimum of two and a maximum of six or seven people can jointly apply for a home loan. If a family decides to buy a bigger home, all the members of the family can apply, and that will greatly increase the eligibility of the applicants. A Housing Loan eligibility calculator can be used.
  • In case of joint home loan applications, the loan tenure differs for the various categories of the borrowers and it can range from 10 to 30 years. If one applies for a loan with the spouse, then the tenure can be a maximum of 25 years, depending on the retirement age of the older co-borrower.
  • A very important thing that has to be kept in mind regarding joint home loans in the concept of Co- borrower and Co- owner. One can be a main applicant in a home loan and the others might be the co- borrowers. Co-borrowers need not be co-owners in the property but it is mandatory that all co-owners of the property have to be joint borrowers. In this case, the maximum tenure of the loan can go up to 30 years, depending on the age, income and creditworthiness of the borrowers.
  • Certain documents are required to ensure that the joint home loan can be issued in the name of the co- applicants and they are the same that are required for a single home loan applicant. Photo ID and Age Proof, Address Proof and the IT returns for the last three consecutive years are mandatory. For salaried people, one would have to provide the salary slip of the last six months and the bank statement of the last three months. Those who are self employed or have their business will have to provide the TAN as a business proof, along with sales tax documents. Apart from these, the creditors could ask for any other documents as per their requirements.
  • According to financial experts, it is also advisable to sign a MOU or a Memorandum of Understanding among the co-borrowers on each one’s share of the home loan repayment amount as well as the property. The best way to do so would be to deposit post- dated cheques or PDCs that might be issued from a single or joint account. The EMIs can also be shared among the borrowers with specific number of cheques to be issued by both.
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Shilpi Agrawaal
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