Owning a home has become easier with the availability of home loans at attractive and lucrative home loan interest rates. Plus, there are a lot of home loan schemes that can help to increase your savings and reduce your debt burden. One such option is to apply for a joint home loan.
What is a joint home loan?
A joint home loan is a type of housing loan which is taken by more than one individual and repaid with equal financial responsibility. If you want to avail a higher loan amount, then a joint home loan is the best option. The co-applicants for a joint home loan can be your spouse, parents, siblings or children. There can be as many as six co-applicants in a joint home loan.
Friends, sisters or unmarried partners living together are generally not allowed to apply for a joint home loan. They can be co-owners of the property but they cannot be co-borrowers in a housing loan. For the uninitiated, a co-owner is a person who has a share in the property, while a co-borrower is the one who is liable to pay the loan amount.
Benefits of joint home loan:
- Increased loan eligibility
- Maximum tax benefits
- Lower interest rate for women applicants
- Equal liability of repayment
In order to avail a joint home loan, you need to submit the following documents: KYC details such as address and identity proof of the co-applicants, proof of co-ownership of the property and income proof.
Tax benefits on joint home loan:
A joint home loan comes with several tax benefits. All co-borrowers are allowed to claim deductions under Section 80C and Section 24 of the Income Tax Act. To be eligible for a joint home loan, the co-applicant/ individual must be a co-owner as well as the co-borrower. The tax benefits will be in the proportion of the share that the individuals have in the joint home loan.
Each co-applicant can claim a tax-deduction of up to Rs. 2 lakh on the interest payment under Section 24. However, just remember that the total interest claimed by both the co-applicants cannot exceed the actual interest paid to the bank. Each co-applicant can also claim the tax deduction of up to Rs. 1.5 lakh on principal repayment under Section 80C of the Income Tax Act.
Point to remember: Tax benefit on home loan interest as well as principal repayment can be claimed only once construction of the property is completed. The benefits are not applicable if the property is still under construction.
Repayment process: The process for repayment of a joint home loan is similar to that of a regular home loan. Payment can be made from a single or joint account through electronic clearing system (ECS) or via cheques.
Another way is that the co-borrowers could share the number of EMIs between them. A specific number of cheques can be given by one borrower and the remaining balance by the other. Another option of servicing the EMI is that one borrower can pay off all the installments and thereafter claim a refund from the other borrower for his share.
joint home loans can be the best option as it has several benefits when compared to a regular home loan. The risks and benefits are also shared equally. However, make sure that EMIs are paid on time by either one of the borrowers since any late payment or default can lead to legal action against the borrowers. Charges Associated with Home Loan that you must know