It’s easier to get approved for a joint home loan with a spouse or a joint loan with other close relatives, such as parents, siblings, and children.
Home loans are convenient, secured loans and can be repaid over a period of time using the EMI option. Current interest rates on home loans have plunged to almost a 15-year low of 6.75-6.80 percent in amounts up to Rs 30 lakhs.
Due to income restriction or low credit score, high debt-to-income ratio, or any other failure to meet the loan eligibility criteria, if one is denied the amount that needs to be borrowed, take out a joint loan with a relative, increases eligibility for that loan. Also, since home loans are generally large loans, many people prefer to take out a joint home loan.
Industry experts say it is easier to get approved for a joint home loan with a spouse or a joint loan with other close relatives, such as parents, siblings and children.
Obtaining a joint mortgage loan with a co-applicant who has a better credit profile can increase the borrower’s chances of being approved for the loan while also being eligible for a higher amount.
For some banks, it is also mandatory to have a co-applicant for a home loan, while some lenders insist that the co-owner also be the co-applicant. Note that this does not mean that the co-applicant must be the co-owner. A co-applicant is responsible for paying the loan, in case the main applicant is unable to service him, while a co-owner of the property shares the property with someone else. Therefore, taking out a joint home loan with a spouse or relative has its own benefits and advantages.
Compared to a joint loan, for an individual loan, the borrower will be offered a loan limit that will be much lower. For example, a borrower can get the loan amount that can go up to Rs 60-70 lakhs if combined with the relative / spouse limit, while individually he would have been eligible for a loan of Rs 30-40 lakhs.
Along with that, borrowers also get additional concessions on their home loan. For example, if the wife is the primary applicant for the home loan, the loan may be cheaper, as most banks offer lower interest rates to female borrowers.
Borrowers can also enjoy higher tax benefits and most people opt for a joint loan just to take advantage of the tax benefits. For example, in the case of a joint mortgage loan with the spouse, both spouses separately enjoy the Section 80C tax benefit of Rs 1.5 lakh on the principal amount. Therefore, collectively, the tax benefit limit is increased to Rs 3 lakh under section 80C.
Also, with joint mortgage loans under Section 24 on interest paid for a self-occupied house, the Rs 2 lakh deduction is increased to Rs 4 lakh.
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