Buying a home is a huge and important once in a lifetime step for many people. It is a big financial investment and it is understandably one of the most sought after aspirations in life. The modern-day option of availing a home loan has increased the affordability of purchasing a property. Having a co-applicant who is also the co-owner of the property being bought, certainly comes with several advantages related to eligibility, tax benefits and even lower home loan interest rates.
Here are a few reasons why joint home loan is a relief for home loan applicants:
- Improves loan eligibility- Poor credit history and low income reduce the chances of a sole applicant’s home loan getting sanctioned. To increase the chances of one’s home loan application getting approved is to add a co-applicant with a stable and independent income. A joint loan is beneficial in terms of enhancing one’s loan eligibility if his/her co-applicant has good repayment capacity and strong credit score. Lenders consider the sum income of both the applicants and this enables an applicant to be eligible for a higher loan amount. Hence, a joint loan means that you can purchase a grander house.
- Tax Benefits- Tax benefits are available on both principal and interest repayment through Section 80C and Section 24 of the Income Tax Act respectively. Under Section 80C, both co-applicants can avail a tax benefit of Rs 1.5 lakh separately. This leads to an increase in the limit of up to 3 lakhs.
Under Section 24, interest payments of the home loan enjoy a deduction of Rs 2 lakh if the property is self-occupied. This gets increased to Rs 4 lakh if your spouse is a co-applicant. In case the property is let out, there is no cap on the interest limit eligible for tax deduction.
- Concession in case of woman co-applicant- Many banks offer lower home loan interest rates to woman applicants. These interest rates for women are lower by up to 5 basis points than the normal interest rate. Availing a joint home loan is therefore beneficial if the primary applicant or co-applicant is the wife of the home loan aspirant. It is often mandatory for women to be both the co-owner and co-applicant in order for the home loan application to be eligible for concessional home loan interest rates. Another concession in the case of woman applicants is lower stamp duty fee for the registration of the house.
