Owning a dream house of your own is an aspiring desire of all. But at the same time craving for a bigger house is what every individual is pining for. For many it is an investment of their life long hard earned money and hence they move heaven and earth to make their dream come true. Since purchasing an immovable tangible asset like a home is a huge financial decision that requires adequate funds, owning it with self-owned funds is a rare scenario. Home loan thus paves the way making the purchase affordable for an individual. Additionally, applying with a joint housing loan with an immediate family member can also improve the affordability of the borrower.
What Do You Mean By Joint Home Loan?
A home loan which is jointly applied in the name of the applicant and his immediate family member/members (spouse, parents, children & siblings) is referred to as a joint home loan. The primary applicant is the borrower while the immediate family members will be the co-borrowers & co-applicant to the loan. As many as 6 members can be the joint applicants to the loan.
Who Can Be A Co-Applicant In Home Loan?
Joint ownership for the property can be shared between spouse, parents, siblings, friends, relatives, business partners, etc. But to apply for a joint home loan the co-owners have to be in the blood relation with the loan borrower/applicant to become the co-applicant in the home loan. For the business partners applying for joint home loan, the company must be the mandatory co-applicant to the home loan application. Click to know in detail who can be a home loan co-applicant.
To apply for a joint home loan all co-owners of the property must be the joint co-applicants to the loan, irrespective of their independent income whether considered or not for computing the loan eligibility. A home loan co-applicant can be salaried, NRI, self-employed or self-employed professional. Many banks insist on having a co-applicant to the loan even if the income of the co-applicant is not considered for taking a housing loan. Under such circumstances where the income of the co-applicant is not considered the borrower can add a nonworking co-applicant to the joint home loan application.
Given below is the list of the immediate family members who can apply as co-applicant with applicant/ borrower for a joint home loan.
1) Spouse – Working or nonworking spouse i.e. husband or wife.
Applying for a loan with a working or nonworking wife can still yield a discount on the interest rates for the borrower.
2) Parents – Working or nonworking parents i.e. father or mother.
By the virtue of the parents being a joint owner of the property, it is assumed that the property heirship legally belongs to all of their children. The Banks at times therefore ask the borrower to obtain a NOC i.e. no objection certificate from his siblings. Hence adding a parent co-applicant is more beneficial for the borrower who is their single child leaving no room for property succession. Moreover the tenure of the loan with parents as a co-applicant will also be restricted to their retirement age which is 60years for salaried and 65years for self-employed.
3) Siblings – Working or nonworking siblings i.e. sister or brother.
Joint application for home loan can be applied with bank by brother & brother and unmarried sister & sister. Considering brother and sister income is a rare scenario. Majority of the private banks do not entertain such loan applications of the duo. There are only a few HFCS and public sector banks who approve of this, HDFC Ltd. & Canara Bank are one to mention. Additionally the banks also preconditions the home loan with the duo purchasing a home that is either 2 bhk or more to avoid the risk of NPA due the succession of the property.
Why Apply For Joint Loan For Housing Loan?
While it is an accomplishment to purchase your dream house, the triumph is often apprehensive about the liquidity to procure the home i.e. finding the low cost housing loan, its repayments and the home loan eligibility. On tenterhooks, since the loan eligibility is dependent on the borrower’s income, profile, CIBIL & employment; additionally on loan tenure & interest rate of the lender Banks/NBFCs/HFCs, applying for a combined home loan will not only enhance the eligibility but will also help in easy loan repayments owing to shared debt-burden.
Since for the balanced financial life it is important that the home loan does not turn out to be expensive over the duration of the loan, joint home loans are of significant importance because of the following joint home loan benefits.
Benefits Of Joint Loan For House
1) Higher Loan Eligibility
By adding an earning member to the loan application will help to enhance the loan amount of the borrower. The combined income of all applicants/co-applicants if considered will make the borrower eligible for a higher quantum of the loan amount. Thus, with joint home loan eligibility, a borrower can afford a bigger size of the house because affordability is the main factor that determines the size of the house. Alternatively with higher eligibility the borrower can also prioritize his geographical location of the house making him affordable to purchase the one.
However, the home loan eligibility for joint applicants is dependent not only on the income of all applicants/co-applicants but also on their age (Maximum up-to 60 years), profile (Salaried, NRI or Self-employed/Professional), obligation (Outstanding balances of the other loans taken if any), employment details (Designation, work experiences, business vintage,etc.) & the CIBIL scores. (Learn how to apply for a home loan with bad CIBIL scores with Loanfasttrack)
2) Easy Loan Repayments With Shared Debt Burden
Taking a joint home loan can help in easy servicing of the loan for the borrower. Since the responsibility to repay falls on both borrower/co-borrower who are the applicant & co-applicant to the loan, the repayment burden gets shared and hence the borrower feels less burdened. The loan repayment instalments i.e. the EMIs are generally served through the bank account of the primary applicant or through the joint account of the applicant & the co-applicants by the way of standing instruction given to the bank i.e. auto debit/ ECS (Electronic Clearing System).
3) Joint Home Loan Tax Benefits
The joint home also provides the tax benefits on home loan for joint owners of the property. Both applicant and co-applicants can claim the housing loan tax rebate for principal repayment of housing loan under 80C and for housing loan interest under section 24b of the Income Tax Act,1961 based on the ratio of their ownership.
- For repayment of housing loan 80C each can claim the maximum tax deduction of up-to Rs.1.5 Lakhs per financial year.
- For deduction of interest on housing loans under section 24b the maximum home loan interest deduction limit each can apply is up-to Rs.2 Lakhs/ Rs.30,000/- per financial year on self-occupied property. No home loan rebate for interest exemption on let out properties.
- Each can claim the additional benefits for interest on housing loan section 80EE & 80EEA for up-to Rs.1.5 Lakhs per financial year for their first house purchase.
4) Interest Rate Concessions With Women Co-applicant
The lender Bank offers a special discounted rate of interest for an women applicant/co-applicant to the housing loan. 0.05% – 0.10% interest rate concession is generally allowed for a women borrower. So if the home loan interest rate of the bank is 7%p.a., the applicable interest rate for women borrowers is 6.90% p.a. However to enjoy the benefits of interest concession the women applicant/co-applicant has to be the sole owner or a joint owner of the property. Click to know additional housing loan benefits for women borrowers.
Use Loanfasttrack’s home loan EMI calculator to calculate your EMI @ lowest home loan interest rate starting from 6.70%* p.a.
Check Out The Best Home Loan Deals
|Bank Name||Rate Of Interest||Processing Fees||Tenure|
|ICICI Bank||6.70% p.a. – 8.05% p.a.||0.30% of the loan amount + applicable GST||Up-to 30 years|
|HDFC Ltd.||6.75% p.a. – 7.85% p.a.||Up-to 0.50% – up-to 1.50% of the loan amount + applicable GST||Up-to 30 years|
|HDFC Bank||6.75% p.a. onwards||Rs.5900/- + applicable GST For Salaried 0.30% of the loan amount + applicable GST -For Self Employed||Up-to 30 years|
|Canara Bank||6.90% p.a. – 8.90% p.a.||Rs.10,000/- + applicable GST||Up-to 30 years|
|CLICK to get the complete chart|
Pre-Conditions To Avail A Home Loan In Joint Name
Since home loan can be availed jointly in the name of the borrower and his immediate family members, below mentioned prerequisites are mandatory to avail the home loan in joint names:
- It is mandatory to have joint ownership in property to apply for a home loan for joint property.
- If the income of the co-applicant is to be considered for the higher loan eligibility, it is mandatory for the co-applicant to be a co-owner of the property.
- If the income of the co-applicant is not considered for the higher eligibility, it is not mandatory for the co-applicant to be the co-owner of the property.
- The co-applicant must have a legal and regular flow of income, if his income is to be considered for home loan.
- If the brother-brother and unmarried sister-sister income is to be considered for loan, the duo must be purchasing minimum 2bhk or more.
- It is important that the co-applicant has a good CIBIL score to avoid the chances of loan rejections. Know How Your Home Loan Inquiry Impacts Your CIBIL Scores
- The tenure of the loan with a co-applicant will be restricted to their retirement age of up-to 65 years.
- Joint home loan with friends is not allowed.
- Do not apply for a joint home loan if the co-applicant:
- Has a poor credit score.
- Is nearing retirement.
- Has already utilized his credit limit.
- Do not have a consistent and regular income source.
Get complete knowledge on housing loans. Read our previous post “Everything you must know before applying for a home loan”.
The joint home loan documentation is similar to home loan documentation. All the applicants and co-applicants need to submit the following documents to the lender Banks/NBFCs/HFCs.
- KYC – Pan Card, Aadhar Card, Latest Passport size photograph, Office proof & Residence Proof of the applicant & co-applicant.
- Income Documents – to be obtained from only those co-applicants whose income is to be considered for the home loan.
- Income Documents For Salaried – 4 months Salary Slips, 6 months Bank Account Statement & 2 years From 16.
- Income Documents For Self-Employed – 3 years ITR with Saral Copy + Balance Sheet + P&L Account + Capital Account, 12 months bank account statements of all bank accounts savings + current account.
- Property Documents – Prior Chain of Agreement, OC/CC + approved plans, Index 2, Share Certificate, Society Registration Copy & Property Tax Receipt.
For a detailed list of documents kindly refer to the following links.
- Home loan documents required Resale Case for salaried, for self employed for Proprietorship firm, Private Ltd. Company, Partnership Firm.
- Documents required for home loan from builder for salaried, for self employed Proprietorship firm, Private Ltd. Company, Partnership Firm.
- Housing loan documents required for home loan balance transfer for salaried, self employed –Proprietorship Firm, Private Limited Company, Partnership Firm.
Q. Can two person take home loan for same property?
Ans: Two persons can only jointly apply for the home loan on the same property and not individually. For the two to jointly apply for the home loan, must be in blood relation
Q. Which home loans can I jointly apply for?
Ans: Joint home improvement loans
Q. Is it mandatory to have a joint account to apply for a joint home loan?
Ans: To apply for a home loan joint account is not mandatory, unless the bank/credit manager insists to have one under special circumstances.
Q. How much are the joint home loan interest rates?
Ans: Standard home loan interest rates apply for the joint home loans. For the joint home loans with women applicant or a co-applicant, an 0.05% p.a. – 0.10% p.a. concession in the interest rates will be allowable.
Q. With whom can I apply for a joint home loan?
Ans: You can share the responsibility to repay the loan with a trusted family member. Yo may apply for:
- Joint home loan with wife/ Joint home loan with non-working wife.
- Joint home loan with parents.
- Joint home loan with father.
- Joint home loan with mother.
- Joint home loan with sister.
Q. Is it mandatory to have an individual home loan cover in joint home loans?
Ans: Banks usually cover both the applicant and the co-applicant while providing the insurance cover. On the contrary it is not mandatory to have insurance if you are sufficiently covered, but for those who are not adequately covered, opting for home loan insurance for joint applicants is definitely recommended.
Q. What happens when one of the co-borrower does not repay?
Ans: All loan borrowers are equally responsible for the repayment of the loan to the extent of their share in the property. If any one of the applicants fails to repay, the onus of repaying lies with other applicants to the loan, for which it is mandatory that the co-applicant/ co-borrower has a consistent and regular flow of income if the primary applicant/borrower is unable to repay. Moreover the CIBIL score of all the applicants will also get impacted even if any one of the borrowers fails to repay the loan.
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