11 OCTOBER, 2019

A lot of married couples start planning to buy a house to settle down in their life. In our country, buying a house is synonymous with settling down and starting a family. Your new house is like your own place in the world which you can design as per your wishes. With easy accessibility to home loans, purchasing a new house has not remained as difficult as it was in the past. Still, if you think home loan might disturb your finances thenlet us introduce you with the concept of Joint Home Loan. 

What is a Joint Home loan?

It is a housing loan taken by two or more people, who are sharing an equal responsibility to repay it. The applicants on the joint loan are called as co-applicants. Along with your spouse, any immediate family member, who is financially stable and eligible to be a co-applicant as per banks policies, can be a co-applicant on a joint home loan.

Although husband and wife is the most preferred combination for a joint loan by lenders, your children orparents can also be co-applicants. Taking a joint loan with a co-borrower helps you to manage finances effectively. However, sharing the responsibility of repaying a loan is not the only benefit that comes along with joint loans. Here are the reasons why taking a joint loan is beneficial for you?

Enhanced Eligibility for Home Loan:

This is one of the best advantages of applying for a joint home loan. Lenders consider the credit score and income of both co-applicants to decide the eligibility for a home loan. So, while taking a joint loan, you can get a bigger loan amount sanctioned.

For example, Mr. and Mrs. Khan want to buy a house that is valued at Rs. 70 lakhs. Both of them are salaried employees of a well-known organisation. If they apply individually, they are eligible for the loan of Rs. 50 lakhs. However, when they apply for a joint loan, their combined income is considered for eligibility, which helps them to increase the loan amount to their desired level.

Attractive Interest Rates

Women are generally considered as safe borrowers. Therefore, lending organisations provide you with attractive home loan interest rates when one of the co-borrower is a woman.

Tax Benefit

In India, home loans are considered as one of the best tools to save tax. In the case of joint home  loans, both co-applicants get a tax benefit towards principal repayment and interest.

According to Section 24 of the Income Tax Act, co-borrowers of a joint loan can claim housing loan tax benefits for the payment of interest up to Rs. 2 lakh. This can be really beneficial for you as the major portion of home loan EMIs are used to pay off the interest in the initial years of the loan.

Moreover, according to Section 80C of the Income Tax Act, you can claim a deduction from your taxable income against the principal portion paid as home loan EMIs.

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Disclaimer: This Article is for information purpose only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. Bank make no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Newsletter. The information contained in this Article is sourced from empaneled external experts for the benefit of the customers and it does not constitute legal advice from Kotak. Kotak, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein.