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Joint Home Loan

Joint Housing Loan

Last Updated 29th Jul 2021

A joint home loan is a loan that 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 or more people with one being a primary applicant and others being a secondary applicant.

  • Joint home loan interest rates start at @ 6.65%.
  • Joint home loan allows each of the co-applicants to claim tax benefit.
  • Adding your wife as a co-applicant can allow you to avail discounted rates by banks or housing finance companies for women borrowers.
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What is a Joint Home Loan?

A joint home loan is a secured loan availed along with the co-borrower, with equal financial responsibilities to enjoy concessional home loan rates and tax benefits. Any person who applies for the loan along with a co-borrower is known as a 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 meet the policy norms, which typically allow two brothers, husband-wife, mother-son or father-son to be the co-applicants.

Who is Eligible for a Joint Home Loan?

If you want to take a joint home loan, you should meet the following eligibility criteria:

  • Indian citizens above 18 years of age with a minimum work experience of two years.
  • The minimum income of the applicant must be ₹ 25,000.
  • Co-applicants: More than six people cannot take a joint home loan with one loan application.
  • Relationship between the applicants: The bank policy specifies the situations in which relatives can be co-applicants for a home loan application. The relatives which are allowed to be co-applicants and take a joint home loan are husband-wife, brother-brother, mother-son, and father-son.

Joint Ownership

Joint ownership of property is compulsory to get a joint home loan as the lenders get additional comfort from the earning capacity of the co-applicant and hence, are 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.

What are the Benefits of taking a Joint Home Loan?

Taking a joint loan for the home is a decision that not only provides the borrower the benefit of getting a better home but also reduces the overall cost of home due to increase in tax benefits. Some of the following joint housing loan advantages are:

  • 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 primary borrowers and co-applicant to claim higher tax benefits on home loans. 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 ₹ 1.50 Lakh on principal amount and ₹ 2 Lakh 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.
  • Reduces risk: As the accountability to repay the loan falls on both the primary borrower and co-applicant, there is comparatively less burden on the borrower.

Joint Home Loan with Wife

If your spouse is also earning, you can add them as co-applicant and take all the advantages. The borrower can avail of a loan for a tenure up to 30 years. There are various banks which provide concessions to women applicants. These relaxations can be availed on stamp duty fees for the registration of the house, discount in interest rates and the tax 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 ₹ 7 Lakh per year. 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 the case of taking a home loan with your father as a co-applicant, the tenure of the loan would be determined on the father’s retirement age. Also, a joint loan with a 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 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 a joint home loan are similar to that of ‬home loan documents only.

  • 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
  • Business proof for self employed 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 Interest Rates and Charges

The table-below mentions the interest rate and other charges on a joint home loan:

Interest Rate6.65%
Processing FeeUpto 0.5% of the loan amount; minimum processing fee of ₹ 10,000
Prepayment/ForeClosure ChargesNil for floating rate home loans

How to Apply for a Joint Home Loan?

You can apply for a joint home loan via two modes:

  • Online: By Visiting the bank website or at online marketplace like MyLoanCare.
  • Offline: By Visiting the bank branch or calling customer care.

FAQs

How much joint home loan can I get?

The amount of loan you can get depends on your income level, the income of your co-applicant, property value , and current liability. You can borrow a home loan for a maximum amount of ₹ 100 Cr.

Can two friends take a joint home loan?

No, financial institutions do not permit you 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, if husband and wife are co-owners of the property, they can avail of a joint home loan, and both of them can also claim tax benefits on interest payment and principal paid under Section 24 & Section 80 C of the Income Tax Act.

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 for co-owners and co-applicants for a taking housing loan. Adding in co-applicants, reduces the financial responsibility and increase the home loan eligibility of the primary borrower.

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. Co-applicants can be your blood-tied relatives such as mother, father, brother, unmarried daughter or wife.

What is the meaning of Co-applicant income?

The additional income of the Co-applicants that are added to the primary applicant’s income to calculate income based eligibility for a home loan is known as Co-applicant income. Banks allow only blood relatives or the immediate family to be Co-applicant and include their 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.‭ ‬ In addition, 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 ₹ 1.50 Lakh each on repayment of the principal amount of home loan under Section‭ ‬80C and up to ₹ 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. 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.‭Thus, 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. Availing a loan with your wife as a co-applicant may provide you discounted rates.

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 and the joint owner of the property to avail a tax benefit.‭ ‬Keep in mind that you will avail of 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 like higher loan amount eligibility, flexibility in loan repayment,‭ ‬Income Tax benefit under section‭ ‬80C,‭ ‬special rates to women borrowers,‭ ‬etc.‭ However, some of the cons include delay in loan processing,‭ ‬as multiple applicants could delay the documentation.‭ ‬Further,‭ ‬any delay in repayment could also hurt your as well as your co-applicant’s credit score.

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 home loans that are applied individually.‭ ‬Secondly,‭ ‬it also helps you to share the loan burden equally applied along with your co-applicant‭.


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