Process to Change Co-applicants in a Home Loan

After availing of a Home Loan with a co-applicant, you may wish to modify the loan arrangement. The reasons for this could be several - perhaps your co-applicant no longer has the same financial capacity, or you would like to retain sole ownership of your loan. In such circumstances, your co-applicant can be changed or written out of your Home Loan deal.

learn more about who a co-applicant is and how to modulate the arrangement in your existing Home Loan, read on.

A co-applicant is an individual who agrees to apply for a Home Loan alongside you. You serve as the primary borrower while they are listed as the secondary borrower. Effectively, they take up the responsibility of paying the Home Loan EMIs just as much as you. Applying for a co-applicant enhances your Home Loan eligibility, as the risk percentage of your Home Loan application may decrease.

Lenders also offer attractive lending terms to those, whose co-applicants can boast of strong eligibility themselves. People who fall short of meeting the eligibility parameters have a better chance of securing a Home Loan, should they apply with a co-applicant.

If you want to change the co-applicant in your Home Loan, here are some important steps to follow:

STEP 1: Contact your Lender to Request a Novation

To initiate the process, you must contact your lender and request a novation. A novation is a declaration of a shift in the responsibility of the loan repayment. This means that you would be the sole proprietor of the loan and will be responsible to pay the EMIs yourself.

However, you must go through the lender’s terms and conditions in detail, as several lenders have restrictions put in place over the matter of having a Home Loan co-applicant.

STEP 2: Establish the Reason for Wanting to Change your Co-Applicant

Lenders require valid reasoning backing your petition to change your co-applicant. If your income has seen a recent rise, which enables you to take on the loan yourself, you will be asked to prove the same through proper documentation.

STEP 3: Demonstrate the Ability to Repay the Loan Amount Alone

You need to prove to your lender that you can comfortably underwrite your Home Loan without a co-applicant and keep up with the pre-decided repayment schedule. To establish your repayment capacity, you may be asked to provide your recent salary slips and bank account statements, for the lender to consider your request.