Most homebuyers opt for home loans to see their dream of a home fulfil. Are you a prospective homeowner? If you are contemplating to seek a home loan, certain things need your attention. A very crucial aspect many borrowers fail to notice is the possibility to add someone as a co-borrower with your application. It should be relieving to understand that it is not imperative to obtain a loan solely by your name. All banks would provide necessary options for including a co-borrower name in the application.
Before delving somewhat deeper within the matter of taking joint property loans, you should clarify on the idea about who is eligible to act as a co-applicant at your loan. According to legal provisions, one may name his or her spouses, children, parents, or siblings as co-borrowers. You have to attend to the issue of ownership as well. The applicant’s spouse is an eligible co-applicant although she/he may not act as a property co-owner. In case, you are registering the names of your parents, children or siblings, then you must furnish a legal document specifying their ownership before adding their names into the empty spaces for co-applicants on the loan application.
Now that you have a clear idea on the regulatory provisions of co-application, check out the following aspects to evaluate the advantages of adding their names.
- Increased loan value
In case you are a singular applicant to the property loan, only your assets and monthly income would be taken into account by the lender. The bank would definitely need some sort of a guarantee on repayment through fixed assets and projected monthly income potential.
It surely seems more sensible adding the name of a willing co-applicant in the form. This shares the essential risk of the loan between you and the other party. As relatively greater assets are now into purview, you can easily expect to obtain a greater amount than you would get in case of a personal loan. Although you are able to get more money, it also entails a shared burden, so you should be sure of the willingness of the other applicant.
- Sharing repayment responsibility
After you have taken out the loan, booking your dream home is only a matter of paperwork. Nevertheless, now you should not neglect with the convenient monthly EMIs that you agreed in seeking the loan. This can definitely be a big burden especially if you are handling it all by yourself.
However, a voluntary co-applicant would share the EMI value so that you can help each other on mutual terms. Sharing financial responsibilities require an excellent understanding between partners. Your bank would set up a convenient agreed system of repayment by splitting the amount equivalently between applicants.
- Benefits on the Tax front
According to the Income Tax Act, loan repayment is under certain special tax benefits. The advantages include tax breaks on the principal value, plus on the specified interest rate. The biggest benefit of a joint application probably is that all parties involved are eligible to claim the tax benefits individually, as per Sections 24 and 80C on Income Tax Act. Each party is able to claim deductions up to the value of Rs 1, 50,000 on the repayment of added interest and to Rs 1, 00,000 at the principal.
These three advantages make it clear why it is a preferable approach to providing a joint property loan application.