Owning a home is your biggest investment and symbolizes your success. When you want to buy a home, you would like to acquire a bigger and comfortable one. However, your financial affordability determines the location and size of the home. One way to increase your affordability is by availing of a loan. However, the eligibility depends on your age, income, repayment capability, and property value. Most lenders do not sanction a higher amount if your total Equated Monthly Installment (EMI) commitment exceeds a certain threshold limit.
Improve your eligibility
An excellent way to increase your home loan eligibility is to include one or more co-applicants in your application. The financial institutions consider your combined incomes to determine your repayment capability, which increases your eligibility.
Who can be a co-applicant?
Most lenders do not make it mandatory to include a co-applicant while applying for a housing loan. Nonetheless, any immediate member of your family may be a co-applicant. However, you need to ensure all co-owners are co-applicants on the loan application form. If there is neither a co-owner nor want to include a co-applicant, you may require a guarantor for your home loan application.
Benefits of joint home loans
There are primarily two benefits of applying for a joint loan, as listed below.
Enhance your eligibility
Lenders consider the total incomes of all the co-applicants while approving the home loan. This increases your repayment capability, which is beneficial in enhancing the sanctioned amount. Therefore, you may be able to afford a bigger home or buy a home at a better location.
Section 80C of the Income Tax Act offers tax deductions of up to INR 1.5 lakh per annum towards the principal repayment of your loan. In addition, section 24 allows tax deductions of up to INR 2 lakh per year towards the interest on the borrowed amount for a self-occupied property. This section 24 deduction has no maximum limit if you let out your property. When you avail of a joint loan, all co-applicants enjoy the aforementioned tax benefits. The actual tax benefits available for each applicant are proportionate to the contribution of every applicant towards the repayment of the borrowed amount. You may use a home loan calculator to determine the benefits based on the individual contribution of each co-applicant.
Section 80EE provides an additional deduction of up to INR 50,000 on interest paid on the home loan taken for the first time. However, the property’s value must be below INR 50 lakh, and the loan amount should not exceed INR 35 lakh. Additionally, it must be your first home purchase made between April 1, 2016, and March 31, 2017. Although there are several benefits of jointly applying for a loan, you need to evaluate all the different options to make an informed decision. The credit history of each co-applicant is important to ensure you receive the most affordable home loan interest rates. Buying a home is a lifelong commitment. Therefore, it is recommended you compare different options available from various lenders before signing on the dotted line.