As a prospective homeowner in 2020, access to home loans has made buying a home a lot easier as opposed to making an outright purchase. Top-tier home loan offerings also come with features that further complement your experience and can play a significant role when making an actionable decision. However, to access such offerings, you must qualify and this can be a tough ask for many first-time homeowners. Considering the sheer size of the loan on offer, lenders have strict criteria and this is where a joint home loan application can help.
With more than one applicant willing to take responsibility for repayment, lenders are more inclined to approve applications as the responsibility is equally shared by all involved. So, to help discern whether or not a joint application is important when borrowing via a home loan, take a look at the following pointers.
With more than one applicant willing to take responsibility for repayment, lenders are more inclined to approve applications as the responsibility is equally shared by all involved. So, to help discern whether or not a joint application is important when borrowing via a home loan, take a look at the following pointers.
Benefit from greater loan eligibility and a higher loan sanction
As mentioned earlier, when you apply for a joint home loan with a co-applicant, both the financial profiles are taken into consideration. This gives the application a higher chance of success as two profiles with a stable income can outweigh minor shortcomings. What’s more, since repayments are handled by two parties, lenders can also sanction a higher amount as the risk of default is significantly lesser. As a result, applying for a home loan jointly can give you access to the funding you need with ease, and give you the opportunity to get the property you desire in the locality you want without any compromises.
For a rough idea on what to expect from the profiles of each applying individual, you can use the home loan eligibility calculator. This way, you can plan your application wisely based on the results of the calculator outputs.
For a rough idea on what to expect from the profiles of each applying individual, you can use the home loan eligibility calculator. This way, you can plan your application wisely based on the results of the calculator outputs.
Enjoy a lower overall tax liability owing to tax benefits
As an individual home loan borrower, you enjoy tax benefits on both principal and interest payments as per Section 80C of the IT Act. You can claim a maximum deduction of up to Rs.1.5 lakh for principal payments and up to Rs.2 lakh on interest payments if the property is self-occupied. The benefit of a joint home loan is that all applicants enjoy these benefits individually. So, in a household with two home loan applicants, the total tax liability is much lesser as both, you and the co-applicant can avail this deduction. However, do note that both applicants must own the self-occupied property in equal proportion for this benefit to apply.
Get a lower home loan interest rate on select offerings with a female applicant
A particularly notable benefit of opting for a joint home loan is that certain lenders offer a lower interest rate for female applicants. This rate is typically a few basis points below the standardized rate and in the case of this long-term instrument, this improved rate can result in significant savings. To measure this difference for yourself, use the freely available EMI calculator and note the total interest differences over a static tenor. However, do note that in order for this to apply, lenders also require that the woman be a co-owner of the home at the time of application.
Handle repayment easily by servicing the loan through a joint account
As the responsibility of repaying dues is shared by all applicants, there are two ways of going about it. Applicants can pay the EMIs separately or by contributing to a joint account and making the payment using it. Ultimately, the payments have to be made through a single cheque, and the methodology employed by the applicants is entirely based on their convenience. With a joint account, contributions are clearly listed, thus making it easier to provide as evidence, if necessary.
Based on the above-mentioned pointers, you’ll find that a joint home loan offers quite a few appealing financial benefits. Besides granting access to a higher sanction, the tax benefits on a joint home loan is a smart way to minimize your family’s tax liability and efficiently utilize your funds.
Based on the above-mentioned pointers, you’ll find that a joint home loan offers quite a few appealing financial benefits. Besides granting access to a higher sanction, the tax benefits on a joint home loan is a smart way to minimize your family’s tax liability and efficiently utilize your funds.
