For most of us, buying a home is the single most significant investment we make in our lifetime. We want our home to be as big and comfortable as we can afford for apparent reasons. One way to increase affordability is by opting for a joint home loan.
In a joint home loan, you add a co-applicant who will share with you the burden of repaying the loan. Generally, immediate family members such as your spouse, father, mother, children, and brother can become your co-applicant for availing of joint home loans.
Adding a co-applicant can be the best solution for those struggling to get their home loans approved. If you’re considering purchasing a property, here’s why opting for a joint loan would be a good move.
Enhanced Loan Eligibility
In a joint loan, the lender considers the income of all the participants to determine the loan eligibility. So naturally, your eligibility will be higher with the addition of an income-earning co-applicant to your loan. This allows you to fulfill your aspiration of purchasing a bigger and better home.
Higher Tax Benefits
By applying for a home loan, both the co-applicants can enjoy the tax deduction on a home loan separately. For this, the co-applicants should also be the co-owners of the property. Also, each of them should contribute to the home loan repayment.
Here are the joint home loan tax benefits that you can avail of:
- Each co-applicant can claim the deduction of the principal paid under section 80C of the Income Tax Act up to a maximum limit of INR 1.50 lakh per year.
- Each co-applicant can claim the deduction of interest paid on the home loan under section 24 of the Income Tax Act to a maximum limit of INR 2 lakh per year.
Concessional Interest Rates
If you apply for a joint loan with a female co-applicant, you can also benefit from concessional interest rates. Most lenders offer lower interest rates to female home loan applicants. The interest for female loaners can be up to 25 basis points lower than the standard home loan interest rate today.
However, some lenders put in an additional requirement that women applicants also be the co-owner of the property to avail the concessional interest rate.
Lower Stamp Duty Charges
Another benefit of having a women co-owner and co-applicant is significantly reducing stamp duty. Many states have relaxed stamp duty charges for women property purchasers. States such as Delhi, UP, Haryana provide 1-2% lower stamp duty for women than their male counterparts.
Also, stamp duty, registration fee, and other expenses directly related to property transfer can be claimed as a deduction under section 80C of the Income Tax Act. However, do note that the deduction should be claimed in the same year in which expense has been incurred.
A joint home loan can be your ladder to securing a higher loan and buying a larger and more comfortable space for your family. Not only do you enjoy higher tax benefits, but you also reduce your repayment burden.
What’s more, first-time loan applicants can use the joint home loan as a tool to improve their credit score. This will enable them to secure a better credit deal in the future.