Purchasing a home may be one of your biggest investments. You may want to buy a large home for maximum benefits. However, being able to afford a big house in a good location is one of the greatest limitations.
You may be able to enhance your budget by opting for a housing loan. However, your eligibility is based on different factors, such as credit score, income, age, and other existing debt obligations. Most lenders adhere to the norm whereby all your monthly installments must not exceed a certain percentage of your income.
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To overcome the limitation of being eligible for a smaller loan amount, you may consider including a co-applicant. You may include between two and six individuals as your co-applicants. Here are the three benefits of availing of a joint housing loan.
- Increase your loan eligibility
The independent income of the co-applicants is included to determine the total loan eligibility. Lenders take into consideration their income while analyzing your repayment capability. This is beneficial in enhancing your home loan eligibility.
- Higher tax benefits
Housing loans enjoy tax benefits under the Income Tax Act, 1961. When you include co-applicants, they are also able to take advantage of these benefits separately. However, the benefits are available only if the co-applicants are also co-owners of the property. Furthermore, they must contribute towards the repayment of the borrowed amount to take advantage of the tax benefits. Borrowers may deduct up to INR 1.5 lakh towards the principal repayment under section 80C of the Income Tax Act. Furthermore, they may deduct up to INR 2 lakh towards the interest on self-occupied property under section 24. For properties that are rented, the entire interest is eligible for the tax benefits. Therefore, the total tax benefits increase when you jointly apply for a housing loan. The actual benefits are determined based on the individual contribution of each co-applicant towards the interest and principal repayment.
- Special rates for women applicants
Several lenders offer a special rate of interest to women applicants. The rate is a few basis points lower than the regular interest rate. Including your wife or mother to your housing loan application may help you reduce the applicable rate of interest. This will enable you to save a significant amount over the loan duration.
Co-applicants share the responsibility to repay the borrowed amount. The following relations may co-apply for a housing loan
- Spouses, which is a common and preferred option
- Father and son or mother and son
- Parent and unmarried daughter
- Parent, son, and daughter where the parent is the owner and daughter provides an affidavit denying any claim on the property
- Two or more brothers with provisional grant when they share the same address and intent to live in a joint family
Applying for a joint housing loan is not only beneficial in enhancing your eligibility but also helps in reducing the total cost of your home because all co-applicants are eligible for the tax benefits. You are also able to reduce your burden of servicing the debt when you share it with other applicants. You may determine the amount by using an online home loan EMI calculator and avail of a housing loan that suits your requirements.