Joint Home Loan

Last Updated 01st Nov 2020

Joint Housing Loan

A joint home loan is a loan which is availed with a co-applicant to be eligible for higher loan amount and share the financial burden equally. Meaning of Co-applicant is that the loan is taken jointly in the name of two people with one being a primary applicant and other being a secondary applicant.

  • Joint home loan interest rates start at @ 6.95%
  • Joint home loan allows each of the co-applicants to claim tax benefit
  • Adding your wife as women co-applicant can allow to avail discounted rates offered by banks for women borrowers
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Co-applicant in Home Loan

Any person who applies for the loan along with a borrower is known as co-applicant. As per the policy of leading banks, a person can be co-applicant provided that they are not minors, have a steady income flow and the relationships between the two applicants meets the policy norms which typically allow two brothers, husband-wife, mother-son or father-son to be co-applicants.

Joint Ownership

A Joint ownership of property is compulsory to get a joint home loan as the lenders gets additional comfort from the earning capacity of co-applicant and hence, is willing to lend more at low rates. Joint home loan improves a borrowers’ eligibility of getting a loan as he is better placed to meet the loan eligibility criterion of a bank. Further, a joint home loan allows a borrower to get a higher loan amount than what he is eligible for based on the income of a single applicant. Joint owners of property who are also joint co-applicants are eligible to claim tax benefits separately on their respective income sources.

Joint Home Loan Benefits

Taking a joint loan for the home is a decision that provides borrowers the following advantages:

  • Loan for higher amounts: Joint loans increase the loan amount eligibility as banks calculate eligible loan amount in a proportion of income. The loan is calculated as a multiplier of loans.
  • Tax relaxations: Taking a joint home loan also allows co-applicant to claim higher tax benefit on home loan. Each borrower separately can enjoy tax benefits on the principal amount as well as on the interest amount under Section 80 C and Section 24 respectively within the applicable limits. However, the total benefit availed cannot exceed the actual amount incurred. 
  • Reduces risk: As the accountability to repay the loan falls on both the borrower and co-applicant, there is comparatively less burden on the borrower.

Tax Benefit on Home Loan for Co-applicant

One of the most significant advantages of a joint loan is that both the co-applicant and borrower can avail of certain tax benefits. For the principal amount and interest, the tax relaxations can be up to 7 lakhs. As per the sec 24 and sec 80C of the Income Tax Act, borrower and co-applicant each can get tax benefit up to Rs. 1.5 lakhs on principal amount and Rs. 2 lakhs on the interest amount.

However, the total amount of relaxations on the interest cannot exceed the amount of the interest paid to the financial institution in any case. 

Joint Home Loan Eligibility

If an individual wants to take a joint home loan, he should meet the following eligibility criterion:

  • Co-applicants: More than six people cannot take a joint home loan with one single application of the loan.
  • Relationship between the applicants: The bank policy clearly specifies the situations in which relatives can be co-applicants for a home loan application. The relations which are allowed to be co-applicants and take a joint home loan are husband-wife, brother-brother, mother-son, and father-son. 

The following table summaries the eligibility criterion for taking a joint home loan:

Home Loan Eligibility with Co-Applicant: Key Criteria

Age Limit 18 to 70. However, the limit may vary in the case of some banks.
Work experience 2 years
Min Income Rs. 25,000
Loan Amount Starting from Rs. ₹ 1,00,000

Joint Home Loan with Wife

If your spouse is also earning, there are more enormous benefits of taking a joint home loan. The borrower can avail of a loan for a tenure up to 20 years and can also avail tax relaxations along with getting a loan of a higher amount. There are various banks which provide concessions to women applicants. These tax relaxations can be availed on stamp duty fees for the registration of the house along with the benefits on the principal amount and the interests. The maximum tax benefit on home loans, for principal amount repayment and interest can be as high as Rs 7 lakh per year. The tenure for the joint home loan is determined by the retirement age of the older co-applicant. The basic condition is that the spouse should be a joint owner in the property to be eligible for a joint home loan.

Joint Home Loan with Non-Working Wife

If you are falling short of funds and wish to avail of the credit for higher value, there are no benefits of taking a joint home loan with the non-working wife as there would be no additional sources of income. However, you can still benefit by joint ownership of property or having the non working wife as a co-applicant for lower stamp duty and lower housing loan interest rates as many banks offer home loan at lower rates for women.

Joint Home Loan with Friend

Banks do not allow taking a joint home loan with a friend because as per the banks only siblings, parents, and spouses are allowed to take a joint home loan.

Joint Home Loan with Father

In case of taking a home loan with your father as a co-applicant, the tenure of the loan would be determined on the retirement age of the father. Also, a joint loan with father is allowed only if a son is the only child of his parents. It is assumed that the ownership of the property belongs to all sons by virtue of the father being a joint owner of property. An unmarried daughter can also take the joint home loan with her father if the ownership of the property entirely belongs to her.

Joint Home Loan with Mother

If the mother is a working woman and the father has either retired or is no more, a son can take a joint home loan with the mother. Taking a joint loan with a mother can be as beneficial as taking a loan with a wife as it helps you to claim higher tax benefit and pay lower stamp duty on property registration.

Co-applicant Documents for Home Loan

The documents required in the case of a joint home loan are similar to that of ‬home loan documents only.

For Salaried Employees :

  • Duly Filled Loan Application Form
  • Recent Passport Size Photographs
  • Last ‬2 ‬years ITR
  • Proof of Identity – ‬PAN Card, ‬Voter’s ID Card, ‬Passport, ‬Driving Licence
  • Proof of Residence – ‬Rent agreement, ‬Leave and License, ‬Latest Utility Bills and Passport
  • Income Documents – ‬6 ‬months payslip, ‬2 ‬years Form ‬16, ‬latest ‬6 ‬months bank statement showing salary credit
  • Property Documents ‬- ‬Past title chain, ‬Sales deed, ‬Conveyance deed, ‬Allotment letter, ‬Possession letter, ‬Latest property tax receipt, ‬Copy of approved plan for construction/ ‬extension

For Self-Employed :

  • Duly Filled Loan Application Form
  • Recent Passport Size Photographs
  • Proof of Identity – ‬PAN Card, ‬Voter’s ID Card, ‬Passport, ‬Driving Licence
  • Proof of Residence – ‬Rent agreement, ‬Leave and License, ‬Latest Utility Bills and Passport
  • Business proof such as VAT/ ‬service tax registration, ‬incorporation details in case of companies, ‬business address proof, ‬profit and loss account and balance sheets certified by CA, ‬copy of partnership deed and proof of business existence and business profile
  • Property Documents ‬- ‬Past title chain, ‬Sales deed, ‬Conveyance deed, ‬Allotment letter, ‬Possession letter, ‬Latest property tax receipt, ‬Copy of approved plan for construction/ ‬extension

Joint Home Loan FAQs

How much joint home loan can I get?

The amount of loan you can get depends on your income level, income of your co-applicant, value of property, and current liability.

Can two friends take a joint home loan?

No, financial institutions do not permit to take a home loan with a friend as they allow only first blood relatives to apply as co-applicants and take a loan jointly.

Can both husband and wife claim housing loan benefits?

Yes, husband and wife can take a joint home loan if both are co-owners of the property.

What is a Co-applicant for a house?

A Co-applicant is anyone who takes a home loan along with the primary applicant or the borrower. Banks have specified the relations which can be Co-owners as well as Co-applicants for a taking a housing loan.

Can Co-applicant apply for home loan?

Yes, banks allow up to 6 people to apply as a Co-applicant for taking a home loan.

What is the meaning of Co-applicant income?

The additional income of the Co-applicants that are added to primary applicant’s income to calculate income based eligibility for home loan is known as Co-applicant income. Banks allow only blood relatives or the immediate family to be Co-applicant and include there income as Co-applicant’s income.

What is the difference between Co-owner and joint owner?

All the owners of the property are known as Co-owners. If there are more than two Co-owners, they are known as joint owners of the property.

Can home loans be taken jointly‭?

Yes,‭ ‬you can apply for a home loan jointly.‭ ‬It is beneficial to apply for a joint home loan as it will help you increase your loan eligibility for a higher loan amount.

Can two friends take a joint home loan‭?

Two friends are not permitted to apply for joint home loans.‭ ‬It is because the lender does not allow any relative other than first blood relations and spouse ‬to be eligible for home loan jointly.‭

How do I claim tax benefit on a joint home loan‭?

Every co-applicant under a joint home loan is eligible for an income tax rebate up to Rs.‭ ‬1.5‭ ‬lakh each on repayment of principal amount of home loan under Section‭ ‬80C and up to Rs.‭ ‬2‭ ‬lakh each under Section‭ ‬24‭ ‬of the Income Tax Regulations.‭ ‬In the case of joint home loans,‭ ‬the tax benefits can be availed only on the amount paid by you and the total tax benefit claimed by all the co-applicants should not be more than the total principal repaid and total interest paid on the home loan annually.‭ ‬The loan paid jointly would help bring down the family’s overall tax liability.‭ ‬However,‭ ‬it’s‭ ‬important to note that each applicant should also have a co-ownership in the property to avail tax benefits.

Can the husband-wife claim home loan‭?

Yes,‭ ‬husband-wife can take a home loan.‭ ‬However,‭ ‬both of them should be earning and be the co-owner of property as well.

Can I take a home loan on my wife name‭?

You can take a joint home loan with your wife if you both are earning well and are co-owner of the property.

Can we take a joint home loan‭?

Yes,‭ ‬anyone eligible can apply for a joint home loan.‭ ‬The members who are eligible for a joint home loan could be first blood relations including parents,‭ ‬brother and spouse.‭ ‬However,‭ ‬the lender does not permit two sisters and individuals other than first blood relations such as friends,‭ ‬cousins and unmarried couples to be eligible for a joint home loan.‭

Can I get a home loan without Form‭ ‬16‭?

The eligibility for a home loan might vary from one lender to another lender.‭ ‬Some lenders might allow borrowers to apply for home loans without Form‭ ‬16‭ ‬provided that you present some other alternative documents like Form‭ ‬26‭ ‬AS,‭ ‬latest bank statements and‭ ‬6‭ ‬months salary receipts to show your income.‭

How to maximize tax benefits on a joint home loan?

In case of a joint home loan,‭ ‬each co-applicant is entitled to a tax benefit under section‭ ‬24‭ ‬and‭ ‬80C of the Income Tax Act with respect to the share in the house property.‭ ‬You need to be a co-borrower as well as the joint owner of the property to avail a tax benefit.‭ ‬Keep in mind that you will avail the tax benefit with respect to the amount paid by you individually,‭ ‬and the total tax benefit claimed by all co-applicants should be less than the total principal repaid and total interest paid on the home loan annually.

What are the pros and cons of a joint home loan?

There are many advantages of applying for a joint home loan which includes higher loan amount eligibility, flexibility in loan repayment,‭ ‬Income Tax benefit under section‭ ‬80C,‭ ‬special rates to women borrowers,‭ ‬etc.‭ ‬Some of the cons include delay in loan processing,‭ ‬as multiple applicants could result in a delay in the documentation.‭ ‬Further,‭ ‬any delay in repayment could also have a negative impact on your as well as your co-applicant’s credit history.

Is it wise to take a joint home loan‭?

You can opt for joint home loans if you want to get a higher loan amount,‭ ‬which is not possible in the case of home loans that are applied individually.‭ ‬Secondly,‭ ‬it also helps you to share the loan burden equally applied along with your co-applicant‭.

Home Loan News - Nov 2020
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