The joint loans are the loans taken together by the two of the borrowers for the repayment of the credit taken. The joint home loans can be taken along with the husband & wife relationship, father & son relationship, brother & brother relation, mother & daughter/son relationship. etc. Any of the close family person relations is acceptable for taking loans. The most common relationship for taking joint home loans is the relation between husband & wife. In the case of joint home loans, banks consider both the person’s income and accordingly approve the loans of the borrower. Also, the credit score of both individuals is taken into consideration while approving the loans. If one of the individuals’ credit scores is low, loan approval can still be considered if the other person’s credit score is good. In joint loans, both the borrowers need to submit their documentation like identity proofs, income proofs, employment proof.ETC. Also, the borrowers can avail of dual tax benefits in case of joint loans been taken. Thus it is far more beneficial to avail loans jointly as a higher amount of loans can be taken by the borrower, and also the joint tax benefit can be taken under income tax act 80C.
In the case of joint ownership, the property needs to be registered on the joint name. Thus both the borrowers can avail ownership of the property. Also, during selling, joint consent of both the owners needs to be taken. The banks approve loans only if either of the applicants has a credit score of above 700 points. The joint loans help reduce the burden on the single borrower as the liability is on both the persons for the repayment of loans. If one person is unable to repay the installments, another person can repay the loans. Joint home loans typically help in increasing the ownership of the females in the case of property, as most of the properties owned in India are male-dominated. The tenure & other conditions regarding repayment of loans remain the same in the case of the joint loans been taken. Joint home loans can be repaid early and pay extra amounts as installments to avail rebate on early repayment of loans and become early debt-free. The bank charges lower interest rates in case joint loans are taken wherein one of the borrowers is female.
Following are the myths about joint home loans:
The co-applicants name is just a formality:
The co-applicant is the equal shareholder in the property when loans are jointly taken. Thus the co-owner has legal rights over the property when the name of the co-owner is added. Both the co-owners are equally responsible for the repayment of loans.
Only the primary borrower receives the tax benefits:
In the case of the property owned jointly and if both the borrowers have a source of income, then in that case both the borrowers can avail tax benefits on the loans. Thus as an owner and co-owner, both the applicants can avail of income tax benefit under income tax act 80C in proportion to the amount been paid by an individual for the repayment of home loans installments.
If applied jointly, the approval of home loans is guaranteed:
Some people have wrong conceptions in mind about joint loans. The joint home loans application may still be rejected in case of the insufficient income to repay loans; poor credit score of both the borrowers, incomplete documentation, un-clear titles of the property for which loans are applied, or else unstable income can be the possible reasons for getting the home loans rejected.
The co-applicant has no role to play in case of closure of the loans:
The lender must take a no-objection certificate from the lender after the complete repayment of the loans. At that time, the signature of both the co-applicants is required by the borrower. Thus the co-owner plays an important role in the closure of the loans as well.
A co-applicant who is non-working increases the eligibility:
The co-applicant who does not have any source of income cannot increase the eligibility of the home loans. The applicant should have a proper source of income only in that case the consideration of both personal incomes can make eligible for availing higher amount of loans. A co-owner who has no source of income cannot improve the eligibility of the borrower.
Thus taking loans jointly is a better idea as it increases the chances of the loans getting approved by the borrower. Also, dual ownership can be enjoyed by both the persons in the family. And in the case of the co-owner being a woman, the borrower can also avail discount on the home loans.