Applying for a Joint Loan? Do revisit credit & debt profile of spouse

When applying a joint loan, a working couple benefits to become eligible for higher loan, which otherwise is limited for a sole earner.

Mar 29, 2015 06:03 IST India Infoline News Service

Over the last few decades, the trend of double income family is on a rise as more and more women are deciding to continue work post-marriage. Resultantly, the combined purchasing power of a couple is also rising, which allows them to apply for a joint loan for buying a home or a car. When applying a joint loan, a working couple benefits to become eligible for higher loan, which otherwise is limited for a sole earner. For example, husband and wife drawing a salary of Rs. 1 lakh each per month could get a home loan of up to Rs. 1 crore. Had the couple applied for a home loan on an individual basis, the home loan eligibility would have reduced to Rs. 50 lakh only.
 
Prepare before taking joint loan
 
But conditions do apply on a couple applying for a joint loan. It is not just the salary but credit profile, and debt-to-income ratio too comes into play when a bank decides to approve a loan. A loan application bears chances of rejection if credit score of either of the spouse is in bad shape.
 
Moreover, too much outstanding debt on any of the spouse could spell trouble. If a couple keeps finances separately than the one with good credit profile will be left on his own due to bad credit score of the other. The loan eligibility limit could also decrease if one of the spouses has defaulted on credit card payment or has surrendered any credit card with outstanding payment.
 
Credit cards ruin it most of the times
 
Similarly, a couple could come in trouble if any one of the spouses fails to pay EMI under a joint loan. If joint loan is availed, then care must be taken that the EMIS payments are regular as any default could spoil the credit score of both husband and wife. Secondly, it is seen that credit cards are the biggest culprits to ruin the credit score of many. One must be vigilant to track and properly surrender all unused credit cards and ensure there is no outstanding balance left that could impact one in future.

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