The house purchase is one of the crucial and major decision amongst the individuals so as to make a big deal by buying a real estate property. Thus buying decision of the house is one of the major reason thus it is advisable that if there are at least two members in the family who are earning then it is recommended to take the property on joint name as well as the loan can also be opted on a joint basis. The joint loan can be taken by the husband and wife if both of them are joint earning members of the family. The joint loan can help both of them as a couple to avail tax benefit partly as a couple depending on how much they contribute towards the home loan payment.
Co-applicant in Home Loan:
Any person who applies for the loan is called a borrower is known as co-applicant. As per the policy of leading banks, a person can be co-applicant provided that they are not minors, have a steady income flow and the relationship between the two applicant which typically allow two brothers, husband-wife, mother-son or father-son to be co-applicants.
Joint ownership:
A joint ownership of property is compulsory to get a joint home loan as the lenders get additional comfort from the earning capacity of the co-applicant and hence is willing to lend at low rates. Joint home loan improves a borrowers eligibility for home loan as he is better placed to meet the loan eligibility criteria of the bank. Further a joint home loan allows a borrower to get a higher loan amount what is eligible for based on a single applicant. Joint owners of property who are also joint-co-applicants are eligible to claim tax benefits separately on their income sources.
Joint Home Loan benefits:
- Loan for higher amounts: Joint loans increase the loan amount eligibility as banks calculate eligible loans amount in a proportion of income. The loan is calculated as a multiplier of loans.
- Tax relaxation: Taking a joint home loan also allows co-applicant to claim higher tax benefit on home loan. Each borrower separately can enjoy tax benefits on the principal amount as well as the interest under section 80C and section 24 within the applicable limits. However, the total benefit claimed cannot exceed the total amount incurred.
- Reduces risk: As the accountability to repay the loan falls on the both the borrower and the co-applicant, there is comparatively less burden on the borrower.
- Tax benefit on home loan for co-applicant:
One of the most significant advantages of a joint loan is that both the co-applicant and borrower can avail tax benefits. For the principal amount and interest, the tax relaxation can be upto 7 lakh. As per the sec 24 and 80C of the income tax act, borrower can get tax benefit up to Rs.1.5 lakh on principal amount and 2 lakh on the interest income. However, the total amount of relaxations on the interest cannot exceed the interest paid on financial institution in any case.
Joint home loan eligibility:
If an individual takes joint home loan, he should meet the following eligibility criteria:
- Co-applicant: More than six people cannot take joint home loan while applying for a single loan.
Relationship between the applicants: The bank policy clearly specifies the situation in which relatives can be co-applicants and take a joint home loan are husband-wife, brother to brother, father to son, mother-to-son.
The following table summarises the eligibility criterion for taking a joint home loan:
Home loan key applicant criteria:
Age limit: 18 to 60. However limit may vary as per banks.
Work experience: Minimum 2 years.
Minimum income: 25,000
Loan amount: Starting from Rs.1,00,000.
Joint home loan with wife:
If your spouse is also earning, there are more benefits of taking a joint home loan. The borrower can avail for a loan of tenure upto 20 years and can also avail tax benefits along with getting a loan with a higher amount. There tax relations can be availed on stamp duty fees for the registration along with the benefits on the principal amount and the interest. The maximum benefits on home loans, on principal amount repayment and interest can be as high as Rs.7 lakh per year. The tenure for joint home loan by the retirement age of the co-applicant. The basic criteria is that the spouse should be joint applicant as a co-owner.
Joint home loan with non-working wife:
If the applicant is falling short of funds and wish to avail credit for a higher value, there are no benefits of taking joint home loan. However a benefit of keeping non-working wife as co-owner can help applicant reduce registration charges and avail lower interest rates on loans.
Co-applicant documents:
For salaried employees:
- Duly filled loan application form.
- Recent passport size passport.
- Last 2 years ITR.
- Proof of identify- Pan card, voter id, passport, driving license.
- Proof of residence- Rent agreement, leave & license, latest utility bills and Passport.
- Income documents- 6 months payslip, 2 years form 16, latest 6 months bank statement showing from credit.
- Property documents- Past title chain, Sales deed, conveyance deed, allotment letter, possession letter, latest property tax receipt, copy of proof of extension.
- Property documents- Past title chain, sales deed, conveyance deed, allotment letter, possession letter, copy of approved plan for construction.
For self-employed:
- Duly filled loan application form.
- Passport size photo.
- Proof of identity, proof of residence, business proof.
Conclusion:
Thus we conclude that if there are two members been earning in the family especially the husband and wife then in that case home loan should be opted on joint name as it eases the burden on an individual. And also tax benefit can be availed equally by both the applicant. Also there is higher tax benefit as well as lower interest rates on loan wherein there is one of the applicant as female.