Know about Co Applicant Meaning, Eligibility Criteria & its Benefits

22 MAY, 2023

In India, buying property has always been considered to be one of many noteworthy accomplishments in life. Many people start their financial planning at the beginning of their professional life so that one day they can buy their very own dream house. Financial institutions encourage hard-working Indians by providing home loans at attractive interest rates to make this dream come true. Nowadays, owning a house has not remained a distant goal, especially for individuals with a good credit score and a stable financial situation.

However, there are still people who find it hard to be eligible for a home loan due to current financial circumstances or a low credit score. If you are one of them, you need not worry as you can still apply for a home loan, with a co-applicant.

What is a Co Applicant in Home Loan?

When applying for a Home Loan, a Co-Applicant is an additional borrower who applies for the loan amount with you. Including a co-applicant can increase your Home Loan eligibility. Additionally, a co-applicant shares the responsibility of repaying the loan and may improve the chances of loan approval.

Who Can Be a Co Applicant For Home Loan?

The criteria to be considered for being a co-applicant varies from bank to bank. However, the usual conditions adopted by most banks are as follows: 

Husband and Wife:

This is the most preferred co-applicant combination in a home loan. Lenders consider the income of both, husband and wife, for home loan eligibility and approval of the loan.

Father and Son:

A combination of father and his son can co-apply for a home loan. However, final decision is dependent on the policies of the bank.

Parents And Unmarried Daughters:

An unmarried daughter can be a co-applicant for a home loan with either her father or mother or both parents.

Benefits Of Having A Co-Applicant In Home Loan

• When both co-applicants have a good credit score and stable income, the likelihood of loan approval increases.
• Home loan lenders offer attractive home loan interest rate to co-applicants having financial stability and good credit score
• The co-applicants, who are co-owners of the property, get to enjoy combined tax benefits.
• Co-applying for home loan increases the eligibility of both applicants for it.

The co-applicants need not always be co-owners of the property in the home buying process. Furthermore, co-applicants are legally bound to repay the home loan in case the principal borrower fails to do so.

They say, share the burden and it becomes easy to carry it. The same can also be said when it comes to home loans. With the help of a co-borrower, repayment of the home loan becomes easier as well.

Also Read: MOD in Home Loan: A Complete Overview

What Does The Co-Applicant Do? & Their Responsibilities 

• Sharing financial information
• Repaying the loan in case of default
• Maintaining a good credit score

The co-applicant in a Home Loan shares the responsibility of repaying the loan with the primary borrower. They are equally liable for the repayment of the loan amount. In addition, the co-applicant must also provide their financial information to the lender, which helps to enhance the eligibility for a Home Loan.

If the primary borrower defaults on the loan, the co-applicant is responsible for repaying the outstanding amount. Therefore, the co-applicant must maintain a good credit score and ensure timely repayment of the loan amount.

Co-Applicant Home Loan FAQs

What is the role of a co-applicant in a home loan?

When applying for a Home Loan, a co-applicant refers to a person who applies with you as a joint loan amount borrower. Having a co applicant in home loan can improve your eligibility for the loan.

Can co applicant apply for another home loan?

A co-applicant can apply for another home loan if they meet the eligibility criteria and can provide the required documentation to support the new loan application. However, it is essential to note that having multiple loans may impact the creditworthiness and financial stability of the co-applicant.

Is co-applicant mandatory for a home loan?

Although having a co-applicant is not mandatory for a home loan in India, it offers several advantages. One of the key benefits is that it gives the lenders an added level of assurance about timely loan repayment as the responsibility is shared between two individuals. Additionally, having a co-applicant can increase your eligibility for a home loan.

Can a co-applicant be added later to an existing home loan?

Banks have restricted the category of co-applicants to specific relationships. These relationships include husband and wife, father and son, brother and brother, mother and son, unmarried daughter and mother, and unmarried daughter and father.

Can a co-applicant have a different address than the primary borrower?

A co-applicant can have a different address than the primary borrower while applying for a home loan. However, the lender may require the co-applicant to provide proof of their current address for documentation purposes. It is important to note that the co-applicants income and creditworthiness will also be considered while evaluating the home loan application.