A Complete Guide on the Benefits of Joint Home Loan

The Home Loan process can sometimes be overwhelming, especially if you are new to the credit world and lack a credit score. In such cases, a joint Home Loan can be a great option to consider because it permits splitting of the Home Loan with someone of a better financial standing. Let us understand how Joint Home Loan works, what are its benefits and why you can consider it.  

Top Benefits of Joint Home Loan

It always helps to have a bit of support when applying for a loan. The same holds true when you apply for a Home Loan. Here are some of the major benefits of a joint Home Loan:

Higher Sanctioned Home Loan Amount

The best and most obvious advantage of availing of a joint Home Loan in India is that you stand a chance of getting a sizeable loan amount sanctioned. This becomes possible since the lender considers two incomes instead of one for the same application. So, a borrower no longer needs to worry about having to compromise on their ideal home due to a shortage of funds. You can raise your budget and go for property you want in the locality of your choice. After all, buying a home is a once in a lifetime decision for most aspiring homebuyers. 

Easier Home Loan Repayment

When you have a co-applicant in your Home Loan, the responsibility of repaying the housing loan is shared between two individuals. So, the financial burden of heavy EMIs isn’t shouldered by one person alone. The fact that two individuals, instead of one, are responsible for repaying the loan gives peace of mind.  

While a close family member or your spouse may agree to help with a Home Loan that is in your name, registering them officially as a joint applicant can make them more responsible toward paying EMIs with you on time as it is going to enhance their credit standing as well. 

Moreover, if you have a co-applicant to apply for a Home Loan, you may even be able to repay your Home Loan sooner. Since you have two incomes to pay the loan instead of one, you can opt for a higher EMI outgo each month. So, instead of taking a 30 year tenor on your Home Loan, you can opt for a lower tenor, such as 20 years or less. With a shorter tenor on your Home Loan, you are expected to save a lot of money that would’ve otherwise been spent on repaying the Home Loan interest associated with a relatively longer tenor. 

Additional Read: How to Pick the Right Home Loan Tenor

Greater Tax Benefits

Both the co-applicants can enjoy separate tax benefits on the same housing loan. The Home Loan principal and the interest are eligible for Home Loan tax benefits. The Home Loan tax benefits for joint applicant co-owners are permitted under section 80C of the Income Tax Act. However, it’s important to note here that the co-applicant/co-borrower of the loan must also be a co-owner to avail of tax benefits.

Who Can Co-Apply for A Joint Home Loan?

A close relative can easily be added as a loan co-applicant in case of a joint Home Loan for more enhanced loan eligibility. A close relative need not be the co-owner of the property. Other than that, a close relative can be added as a loan co-applicant, if person is the co-owner of the property.

The co-applicant for a joint Home Loan can also be a non-resident Indian (NRI). 

Whose Credit Score Is Used on A Joint Home Loan?

When you avail of a joint Home Loan, your lender will look at the credit score and credit history of applicants that will be on the loan. Since the credit of the individuals involved will impact the loan you qualify for, it can be detrimental if you or the other individual you're applying with has a poor credit score. 

If you/your co-borrower's credit score is making it difficult to get a joint Home Loan, see if you are eligible for joint ownership that will not place the borrower with poor credit's name on the Home Loan but is going to grant legal ownership of the property along with the other borrower(s) involved. 

​Additional Read: Can I Apply for a Second Home Loan?

How to Check Eligibility for a Home Loan?

You can easily check your eligibility for a Home Loan online. There is a one-of-a-kind tool known as the Home Loan Eligibility Calculator that can help understand how much funding you qualify for. The tool is free to use and simple to operate. All you need to do is enter some basic details into the tool to have a fair idea of your eligibility. The details will include the following:  

• City of residence 
• Date of birth 
• Monthly income 
• Monthly obligations 

Once you fill in these details, you will be able to see a window to the right displaying your loan eligibility amount. Do keep in mind that the ultimate decision on your Home Loan will also depend on other factors, such as your age, credit score, and existing liabilities. Your co-applicant’s details will also be taken into consideration. 

Final Thoughts

It is advisable to close other major loans before applying for a Home Loan. The same is applicable to the co-applicant as well. Also, use a Home Loan EMI Calculator to get an estimate of EMI outgo before applying so that you are never in a situation where paying off the loan becomes a burden.