A home loan is the first thing that comes to mind when an individual thinks of owning a home. Once decided there are two scenarios. Firstly, only one of the partners is working. Secondly, a couple is working and has a smooth cash inflow. Today, in this blog post, we talk about the second scenario where the couple has financial stability making them eligible for a home loan together.
What is Joint Home Loan?
It is a type of loan that allows two people in the capacity of a borrower and co-borrower to buy a home. These people can be husband-wife, siblings, or parents. Two people borrowing a loan for the same property purchase means the chance to borrow an increased home loan. Interestingly, the chance of loan sanction is high when you apply together for a home loan.
Eligibility for Joint Home Loan
Home loan that is feasible to avail only with people in a direct relationship. Like, Husband-wife, Siblings, and Parents.
• A minimum of 2 and a maximum of 6 people can become co-borrower. However, the final decision to approve the number of co-borrowers depends upon the financial institution/lender.
• A salaried/self-employed Co-borrower enhances the chance to avail high tax rebate.
• The person with a higher stake in salary becomes a borrower, and the second becomes a co-borrower in a joint home loan application. The lender decides the ownership percentage. Also, a certificate issued by the bank elaborates the structure of interest & principal amount based on which EMI (Equated monthly Installment) is computed.
• Tax eligibility becomes active once the construction is complete and the person starts residing in the property. Both the borrowers can claim for stamp duty & registry.
• Both applicants have to fill out individual forms to apply for the joint home loan. Also, both have to submit their documents.
• The repayment of the joint home loan is possible via the joint account of the borrowers, by segregating the EMI amount between the borrowers, or by depositing Cheques.
• Any non-payment issue of the loan will reflect on both borrowers.
• Ideally, both borrowers should take an independent life insurance policy to ease the burden of home loan repayment in case of any mishap/unpleasant incident.
Joint Home Loan Application and CIBIL Score
The bank considers the CIBIL (Credit Information Bureau India Limited) score of the loan applicants. The salaried co-applicant must have three years of work experience and a minimum of five years’ experience for the self-employed co-applicant. The CIBIL score of the co-applicant should be more than 750. Other pivotal factors like age, qualification, monthly salary, and ongoing loans are also considered.
Document Checklist for Joint Home Loan
When applying for a home loan together, you are required to submit the copy of below-listed documents for quick sanction of the loan application:
- Income Proof
- Address Proof
- Permanent Account Number (PAN),
- Aadhaar card
- Bank statement
- Form16
- Salary Statement for past 6 Months
What is the Joint Home Loan Tenure?
The tenure of a loan depends upon the persons who are borrowing the loan.
• The tenure is 10 Years if the home loan co-applicants are parents, children, or siblings.
• The loan period is for 20 years or the age of retirement for the older loan applicant, whichever is earlier, in the case of the married couple.
What is the Maximum Amount Disbursal for Joint Home Loan?
Banks approve 80-90% of the property cost. The final disbursal amount depends upon the income of co-applicants.
Is there An Income Tax Rebate on Joint Home Loan
There is a provision for tax rebate under Sections 24(b) 80EEA and 80C of the Income Tax Act, 1961 (ITA) for loan borrowers. Every home loan borrower is eligible to avail of a tax benefit upto Rs 2 lakh annually under Section 24(b) of the ITA. Also, under Section 80EE, the maiden homebuyers’ can avail of tax rebates upto Rs. 50,000 on property valued below Rs. 50 lakh. It is possible only if the home loan availed is below Rs. 35 lakh. Each loan borrower can claim a tax rebate of upto Rs.1.5 lakh on the principal amount.
Conclusion
Many people wonder if the co-applicant need not be a co-owner of the property or not. The answer is NO to all of them. However, it is mandatory for every co-owner named in the property deed to be a co-applicant in the joint home loan.
