Few facts about Joint Home Loans

Amit and Aman Khanna, Delhi-based tech professionals, had a dream to own a house in Mumbai. After a long search, both the brothers zeroed in on a house in Mumbai, which cost close to a crore. Therefore, to take the next step towards purchasing the flat, Amit decided to apply for a home loan from a leading bank.

The bank rejected his loan application after carefully considering his salary bracket. Aman, however, didn’t lose heart and explored alternatives to circumvent through this situation. A banker friend suggested that Aman could take a joint loan with his brother, as the sum of their incomes would make them eligible for grant of loan. What ensued in the next four years until now is that they have been able to live their dream of staying in a lavish house.

These days, home buying in most cases happens through home loans. The above mentioned case is not an isolated one. Many people have experienced rejections in the past. Banks reject their application in most cases due to insufficient income relative to the loan sought. In such scenarios, joint loans can assist you in getting approvals for higher loans.

Following are a few important facts in regards to joint home loans:

• Who can apply?

In general, around four to six people are eligible to apply for a joint home loan based on their individual credit profiles. You can apply jointly with siblings, parents, or a spouse.

Co-applicants are people who take a loan jointly, whereas a co-owner is a person who owns the property. It means all co-owners have to be co-applicants, but all co-applicants need not necessarily be the co-owners.

All applicants need to submit the necessary documents for the processing of the loan, including PAN card number, address proof, and bank statement.

• Better loan eligibility

In case of a joint home loan, the capacity of repayment goes up depending on the co-applicant’s income.

• Repayment process

The repayment can be done from a single or joint account by an electronic clearing system or cheques. In fact, co-borrowers can share the number of EMIs between them such that a specific number of cheques can be issued by a borrower and the remaining by the other. It means repayment of this loan is a joint responsibility of borrowers. When one of the co-borrowers fails to pay the EMIs, the other becomes liable to make the payment.

• In case of disputes

Every home loan applicant should sign a separate legal liability agreement that specifically mentions the liability of each party; this is essential toward sorting issues or disputes, if any, among the concerned parties.

• Tax Benefits

Under section 80C of Income Tax Act, a home loan borrower is eligible for tax benefits, including principal repayment of up to Rs. 1 lakh and Rs. 1.5 lakh of interest repayment under section 24 of the same act. Co-borrowers can claim tax benefits on servicing the housing loan.