Should You Have a Co-Borrower For Your Home Loan?

When you approach a bank to get your home loan, it may refuse to approve the amount you may be looking for, based on your eligibility. In a case like this, instead of opting for an individual loan, you can consider a joint home loan. A joint home loan will not only help you to share your debt-burden but also allow you to get a higher amount. You can share the burden of your loan with as many as six co-applicants.

Who can be a co- applicant?

• Your spouse
• Your parents and son (subject to the retirement age of the former)
• Siblings (only brothers)

In case the co-applicants are parents and children or siblings, the loan tenure is shorter. Also, if the parents' income is considered for repayment, the term may be restricted to the retirement age of the applicant.

Following combinations are not allowed for a joint home loan

• Father/mother and married daughter
• Brother and sister
• Sister and sister

Benefits of a joint loan

• A joint home loan is beneficial as all the co-borrowers can claim tax deductions under Section 24 of the Income Tax Act against interest repaid, and under the Section 80C against the principal repaid. 

• If you plan to own a property jointly, banks will definitely insist on making the co-owner the co-applicant. 

• By co-owning a property with your spouse or other family members, you can increase their home loan eligibility also help them getting a higher amount.

However, you can choose between single or joint loan, depending on various circumstances. For example, if you would like to buy a self-occupied property only for yourself, you should always opt for single-holding loan. In case you are supporting your parents or you want to buy a house with your spouse, you can opt for a joint loan.

While taking a joint loan you should always remember the below points:

• There could be issues in case of a dispute between husband and wife. In case the wife is only a co-borrower, she may face hassles if the husband stops paying the EMI. 

• In case of the husband dies without leaving a will, the property will be distributed under the succession act of his religion. Typically, the property will be distributed among wife, children and mother in such a scenario. If the wife is a co-applicant but not the co-owner of the property, the responsibility of clearing the loan would rest on her, whereas here share in the property would only be 1/3rd. 

• In case of default by the primary borrower, other assets of loan co-applicant will be at risk.