Buying a home is one of the biggest fi nancial decisions that you need to consider carefully. One of the most important things before buying a house is to fi nd out whether you are eligible for the amount of loan you would require. Lenders usually consider the homebuyer's current liabilities, assets and income before forwarding a loan. Therefore, if your mortgage requirement is higher than what you are eligible for, you may increase your eligibility by considering a joint housing loan. Banks allow up to six applicants for a housing loan, depending on their individual credit profi les. Here is a detailed guide on the benefi ts of joint home loans.
WHO ALL CAN APPLY?
You can take joint home loan with your spouse, or include parents and siblings, subject to certain conditions. Adhil Shetty, CEO, Bankbazaar. com and co- founder, says: "Married couples, or a parent and child, can take a joint loan. Some banks allow brothers to apply for a joint home loan provided they are both co-owners of the property. Banks insist that all co-owners of the house must be co-borrowers in a joint home loan." Sisters, friends or unmarried couples living together, however, are not allowed to take joint home loans.
Eligibility for a home loan goes up for joint home loans as the repayment capacity increases depending on the income of the co-applicants. For example, assume you would like to buy a property worth `1 crore. The bank is ready to fund 80 per cent, or `80 lakh. If your income does not meet this requirement, you might be forced to look at a house which costs less. However, if you apply for a home loan along with your spouse, who draws a regular salary every month, then your joint income will be considered to determine the loan amount. Says Renu Sud, Managing Director, HDFC: "If a woman is the fi rst applicant, or co - applicant, and sole or joint owner of the property, then applicants can avail the home loan at fi ve basis points below the normal applicable home loan rate."
However, as a thumb rule, you must never exceed 35 per cent of your net monthly income as equated monthly instalments (EMIs) for all debts. Anything more than that could cause fi nancial stress, especially when your EMIs rise due to increase in interest rates.
The repayment process for joint home loans is similar to that of a regular home loan. Payments can be made from a single or joint account through cheques or electronic clearing system (ECS). Co-borrowers can also share the number of EMIs between them - a specifi c number of cheques can be issued by one borrower and the balance by the other. Most importantly, repayment of a joint home loan is the collective responsibility of all borrowers. Always remember to pay the EMIs as per schedule. If one of you will fail to pay the EMI then the other will be liable towards payment. In case of any delay or defaults in EMI, legal action is taken against the borrower as well as co-borrowers.
The loan tenure also varies depnding on who your co-borr-wers are. When the spouse is a co-applicant, the duration of loan can be up to 20 years. However, in case of parents or siblings, it is up to 10 years.
WHAT IN CASE OF A DISPUTE?
All home loan applicants should sign a separate legal liability agreement, which clearly defi nes the liability of each applicant and helps sort out the situation in case of a dispute. If you default, the bank can start the recovery process against all co-borrowers.
If you and your spouse avail yourself of a home loan, both applicants can claim tax benefi ts on servicing of a housing loan. For example, if co-borrowers are servicing the loan jointly in equal proportion, each one can claim tax benefi ts of up to `2 lakh on interest payment, which effectively means, you can claim benefi ts of up to `4 lakh, jointly. This also means that the rate of interest on the loan comes down substantially, resulting in huge savings.
Says Sanjiv Bajaj, Managing Director, Bajaj Capital: "One can get tax benefi ts on home loan up to `1.5 lakh under Section 80C and `2 lakh under Section 24. But if you go for a joint home loan along with your spouse in the ratio of 50:50, then both of you can claim these benefi ts separately. So the combined limit will be `3 lakh under Section 80C and `4 lakh under Section 24. This can reduce your overall cost of loan for the family considerably."
Bajaj says the total deduction will be `7 lakh and, if both spouses are in the highest tax slab, they will get a tax benefi t of `2,10,000, which is double compared to an individual home loan. However, this provision may vary from person to person.
Joint home loans are undeniably benefi cial. So, join hands with your better half and make your dream of owning a beautiful home come true.
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