How Joint Home Loan Maximizes Your Housing Loan Benefits

Owing to the rising number of double-income households, the demand for Joint Home Loans is increasing. Benefits such as enhanced loan eligibility and separate tax filing benefit further encourage people to go for Joint Home Loans. If you are considering whether to apply for Home Loan individually or jointly, consider the following points to learn how Joint Home Loan can increase your housing loan benefits:

Benefits of Availing Joint Home Loans

1. Improves Your Home Loan Eligibility

To avail a home loan, one must be eligible for it. If your credit profile is not enough to get you a home loan or the loan amount you desire, you can add an earning co-applicant. When assessing your Joint Home Loan application, lenders will evaluate the repayment capacity of both the primary applicant and co-applicant. Factors such as credit score, income, age, debt-to-income ratio, etc. will be taken into consideration. The income of the co-applicant as well as yours, combined, will increase your repayment capacity; thereby, increasing the chances for home loan approval as well as the eligibility for a higher loan amount. Who all are eligible to be Home Loan co-applicants? An immediate family member such as your spouse, parents, siblings, etc. can be the loan co-applicant. They can be salaried or self-employed; residents or NRIs (Non-Resident Indians). Note: Lending institutions have a prerequisite that all co-owners of the concerned property must be the co-applicants, even if he/she doesn’t have any source of income. A co-applicant and a co-owner are different from each other. A co-owner jointly owns the property with you. On the other hand, a co-applicant may not have anything to do with the concerned property. All co-owners of the property must be the co-applicants of a home loan. But all co-applicants need not mandatorily be co-owners. Co-applicants are considered only for improving your loan eligibility.

2. Offers Higher Tax Benefits

Joint Home Loan borrowers can avail tax benefits under 2 different sections of the Income Tax Act.

1. Under Section 24 of the Income Tax Act

As per Section 24 of the Income Tax Act, home loan borrowers solely can claim tax benefits of upto Rs. 2 lakh per financial year on the interest amount of the home loan for self-occupied property. And the Joint Home Loan borrowers can avail this benefit separately. If there are 2 individuals applying for Joint Home Loan, each owner of the concerned property can claim tax benefit of upto Rs. 2 lakh in their tax returns. So the combined tax benefit that they can avail is of Rs. 4 lakh, provided they meet the related prerequisites. The total interest on the Joint Home Loan is allocated between the borrowers on the basis of their share of ownership. If no ratio or percentage for the property ownership is specified, the interest part of an EMI will be split equally among the co-borrowers. Also note that if the concerned property is rented, the entire interest amount will be eligible for tax deduction. And since each co-applicant is eligible for the deduction individually, the combined tax benefits will be much higher than the tax benefits one gets in case of an individual home loan application.

1. Under Section 80C of the Income Tax Act

As per Section 80C of the Income Tax Act, home loan borrowers individually can claim tax benefits of upto Rs. 1.5 lakh per financial year on the repayment of the principal amount. And the Joint Home Loan borrowers can claim this benefit individually. So if you with your spouse is applying for Joint Home Loan, each can claim the tax benefit if upto 1.5 lakh in your IT returns, which will give you a total benefit of Rs. 3 lakh.

3. Special Interest Rates for Women

Many lenders offer concessional home loan interest rate if the Joint Home Loan co-applicant is a woman. The concessional interest rates are usually upto 5 basis points lower than the standard home loan rates. To avail of this benefit, the woman co-applicant must be the joint owner of the property. Conclusion Joint Home Loan not only helps you in acquiring a larger or a better home but also in reducing the expense due to the increase in the overall home loan tax benefits. Additionally, sharing the responsibility of home loan also helps in easing the burden of its repayment.