Joint Home loans:Come together for your dream home

Aug / 27 / 2015

Who can apply?
Joint home loans can be availed by an applicant along with his/her spouse. You can also apply with parents or siblings, but check the bank’s terms and conditions beforehand. Sisters, friends or unmarried couples living together are generally not allowed joint home loans.

Loan eligibility
Home loan is a big liability, so it is important to think through. The eligibility for joint home loan improves if the repayment capacity goes up based on the co-applicant’s income.

Loan tenure
-When the spouse is a co-applicant, the duration of loan can be up to 20 years.
-In case of parents or siblings, it is up to 10 years.

Repayment process
-Repayment of the loan is the collective responsibility of the borrower and the co-borrower.
-Remember to pay the EMIs on time. If one borrower fails to pay the EMI, the other will be liable for making the payment.
-In case of delay/default in payment, legal action is taken against the borrower and the co-borrower.
What ensues in case of a dispute?
All home loan applicants should sign a separate legal liability agreement which clearly defines the liability of each party and helps solve a dispute. In case of a default, the bank can proceed with the recovery process against all the borrowers.
Tax benefits
Both applicants can claim tax benefits on servicing of the house loan. For example, if co-borrowers are servicing the loan jointly and equally, then each of them can claim tax benefit of up to Rs 2 lakh on interest payment, which means they can claim up to Rs 4 lakh jointly-which otherwise would have been limited to Rs 2 lakh only.
Do’s and don’ts
-Co-owners of the property have to be joint borrowers but joint borrowers need not be co-owners.
-Both the applicants need to submit all necessary documents-KYC documents, bank statements, employment certificate, salary slips, I-T return statements.
-Credit scores (CIBIL score) of both the applicants should not show delinquencies and default. If your credit score is low, improve it before applying for the loan.
-The repayment record of a joint loan reflects in the credit score of co-borrowers. Default in payment by any partner can impact eligibility for future loans.
-For tax purpose, it is best to procure a home-sharing agreement, detailing the ownership proportion on a stamp paper as legal proof of ownership.
Source – India Today Magazine.

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