Crucial Points to Consider before Taking a Joint Home Loan

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With the plummeting repo and reverse repo rate, home loan interest rates have also been dropping subsequently. In this situation, prospective homebuyers can avail credit and save substantially on interest repayments.

However, successfully availing a home loan depends on several factors, and one of them is eligibility criteria. In case a borrower cannot fulfil the eligibility requirements, he/she can opt for a joint home loan to qualify easily.

Nevertheless, here are some crucial points that one can consider before availing a joint home loan.

Top 7 points to evaluate before applying for a joint home loan

  1. Eligibility criteria

The eligibility criteria of a joint home loan depend on both the borrowers. Lenders check the credit score, monthly income, age, and debt-to-income ratio of each borrower when assessing the loan application. Along with that, the co-borrower must be the owner or co-owner of the said property.

  1. Additional tax benefits

Availing a home loan jointly provides income tax benefits to each borrower separately. As both the borrowers contribute to paying the home loan EMIs, they can claim income tax deductions separately. Under Section 80C of the IT Act, each co-borrower can claim up to Rs.1.5 lakh on principal repayment. Additionally, if borrowers are residing in their purchased property, they can claim up to Rs.2 lakh on interest repayments.

  1. Pre-requisites of income tax deductions

Before availing home loan tax benefits, borrowers must check the pre-requisites associated with home loan tax deductions. There are two factors to consider here, they include –

  • Co-borrowers must be the co-owners of the property.
  • Construction of the property must be completed to avail the deductions. Borrowers may purchase an under-construction property. However, they can only apply for the principal deduction once the construction of the said property is finished. A point to note here is that homebuyers can claim the deductions available on interest payment during the under-construction period.
  1. Choice of co-applicant

One of the vital points to contemplate before applying for a joint home loan is your choice of co-applicant. A co-applicant can be any immediate family member, such as father and son, siblings, etc. If a homebuyer makes his/her spouse the co-applicant, it has certain benefits. If a borrower makes his wife the co-applicant, he can avail the following benefits –

  • Reduced stamp duty charges: Some states in India offer 1-2% concession on the stamp duty charges on properties if they are registered under a woman’s name. The stamp duty, registration charges, and associated expenses are eligible for income tax deduction under Section 80C, up to Rs.1.5 lakh in a financial year.
  • Concession on home loan interest rate: With a woman as a co-borrower, applicants can avail additional benefit on the standard home loan interest rate.
  1. Home loan interest rate

The home loan rate is one of the vital factors to check before applying for a joint home loan. Borrowers can choose between the fixed and floating rate of interest as per their preference. However, it is ideal to consider the advantages and disadvantages of every interest type and the factors that impact home loan interest rate before making the final decision to apply with the best lender.

  1. Additional charges applicable

Every credit type has some associated charges, like processing fees, legal fees, etc. Applicants must consider them as well before availing the home loan. These charges can increase the cost of borrowing; so, individuals must plan accordingly to save on the overall repayment burden.

  1. Pre-approved offers

Renowned lenders also extend pre-approved offers to their home loan applicants. These offers streamline the application process while saving time, and are available on financial products like home loans, loans against property, etc. Individuals can quickly check their pre-approved offer by submitting their name and contact number.

A joint home loan allows homebuyers to avail a credit with their family members, and they can share the burden of repayment. Along with that, they can avail better terms with this credit type and also enjoy other benefits of taking a joint home loan.

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