Joint Home Loan is great when it comes to improve the loan eligibility. If you are looking for a dream house and fall short of the loan eligibility, need not loose your confidence. You can check for the joint loan with your relative to maximize the loan eligibility. This comes with the set of restrictions. You can opt for a joint home loans with your spouse, parents, children and sometimes your siblings. All co-borrowers need not be the property owners, but all the property owners has to be co-borrowers. Husband and wife can be co-borrowers to claim the tax benefits. Unmarried couples or sisters are mostly not allowed as the co-borrowers in most cases. A minimum of 2 and maximum of 6 people can be co-borrowers for a single home loan. This article explores advantages and restrictions for the joint home loans. If you are interested in receiving the future articles from us, please subscribe here.
I have earlier published an article about the joint home loans and benefits. This article is just recap of the provisions on the joint home loans and adding up missing points in the previous article.
1. Borrowing Capacity
It is one of the main advantage of opting for the joint home loans. When your house cost is very huge, one person’s loan eligibility may not be sufficient for buying that house. In that cases, most cases co-borrow with spouse if the spouse also earning member of the family. This would increase the total income of the family and increases the loan eligibility. Banks normally don’t approve the loans more than 40-45% of EMI as the take home salary.
For example, house cost is Rs. 60 lacs, you are only eligible for the 40 lacs loan. Your spouse may be eligible for the remaining 20 lacs when add up her salary for the loan eligibility. Note that if your co-borrower is not paying any EMI then it will improves the eligibility. Also look at the few restriction being a co-borrowers.
- All co-borrowers need not be the property owners, but all the property owners has to be co-borrowers.
- Husband and wife can be co-borrowers.
- Parents also can be co-borrowers in most of the cases.
- Relatives or sisters are not allowed as co-borrowers in most of the cases (Friends can not take joint home loans).
2. Tax Benefits for Joint Home Loan
Getting the tax benefits is one of the great advantage of the joint home loans. The following are two section of tax benefits for a house loan:
- Rs. 1 lac under section 80C for the principal repayment
- Rs. 1.5 lac under the section 24B for the interest repayment
The above exemptions are for self occupied property. If one person is taking the loan, he is eligible for the maximum of what is mentioned above. But, in the cases of joint home loans, each can take the exemption as mentioned above and tax benefits would be huge. This is acting as one of the main reason why many home buyers are opting for the joint home loans. Also note that, each co-borrower has to be pay the EMI proportionally to get the tax benefits. If co-borrower is property owner, then only he/she can claim the tax benefits.
3. Not Eligible For HRA
This also has some dis advantages. HRA tax exemption is one of the biggest component on your salary. This also helps you to save lot of tax for you. If you got for a joint home loan, both of you can not claim the HRA benefits. Only person staying in rented property can claim the HRA exemption under section 13A. How ever there are certain provision which can be used for claiming HRA and Home loans exemption.
4. Disputes At Later Stage
As per the law, each borrower has the liability to pay the share of EMI each month. But, if one can pay the entire amount also not an issue as long as the full EMI instalment is paid on time. This is one problem when going for the joint home loans. If any disputes come at the later stage, repayment of loan would be a problem. That is the reason banks are not willing to accept co-borrowers if they are not married couples.
Another problem is that, if one of the co-borrower has to quit the job due to the personal reasons, the burden of EMI will fall into a single person. This has to be well planed before taking the joint home loans.
I hope the above points provide basic idea on advantages and disadvantages for opting for the joint home loans. If you have any suggestion of experience, please write us in the comments section. If you are interested in receiving the future articles from us, please subscribe here.