The escalating prices of real estate have made housing loans very popular and owning a home is a common desire among us. However, many a time, borrowers feel burdened with debt that will last for a long tenure and are unaware of the fact that this can be eased as home loans can also be taken jointly.
Let's look at how a joint home loan works to your advantage.
Higher Loan Sanction
The first benefit of opting for a joint home loan is that it allows you to borrow a bigger amount. The lender in this case will not just consider your income, but will consider the income of your co-borrowers as well and hence a higher amount of money can be borrowed in joint home loans. This only stands true however, if the co-borrower has steady income and is eligible for the loan amount desired by you.
Better Chances of Loan Sanction
Such a loan-sharing program works best for households where one person's income is not enough for a loan requirement. When the income of more than one person is combined, the repayment capacity increases and the chances of getting the loan approved are better.
Spouses are the ideal co-borrowers for a joint home loan, but one may even take loans jointly with parents or siblings. Friends, and unmarried partners are, however, not allowed to borrow loans jointly. Make sure to assess both yours and the co-borrowers' financial situation before rushing into taking a loan together.
Joint home loans are beneficial from a tax-saving perspective as well. The Income Tax Act provides that a borrower can claim an exemption under Section 80 C up to Rs 1,50,000 for the principal repayment and up to Rs 2,00,000 on the interest amount under Section 24. But in case of a joint loan, all the co-owners can claim deductions individually up to Rs. 1,50,000 under 80 C and Rs. 2,00,000 under 24B. For example, for loan taken jointly by a husband and wife, the total tax deductions can be as high as Rs. 3,00,000 under 80C and Rs. 4,00,000 under 24B. The tax benefits are calculated in the same ratio as the loan is sanctioned and each individual's exemption limit stands.
Sharing Burden of Debt
In situations where a person becomes unable to pay the EMI for a particular month, the co-borrower can take responsibility in a joint home loan. The risk of defaulting on loan payment is also lesser as the co-borrower will share equal responsibility to pay the instalments or repay the loan.
In case of a home loan taken individually, the responsibility of repaying the amount will be on one person only thus forcing him or her to opt for lower EMI amounts and a longer tenure, thus increasing the total interest being paid out. But in case of a joint home loan, the responsibility of repaying the amount is divided and hence there is a higher possibility that the borrower will be able to get rid of the repayment soon and end up paying much lesser interest.
(Adhil Shetty is CEO of Bankbazaar.com)
Disclaimer: This is an advertorial and NDTV is not responsible for the accuracy and completeness of the same.
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