Everything You Need to Know About a Co-Applicant in a Home Loan and Tax Benefits

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Everything You Need to Know About a Co-Applicant in a Home Loan and Tax Benefits

2 min 14 Mar 2025
Highlights:
  • Who is a Co-Applicant in a Home Loan?
  • Benefits of Having a Co-Applicant in a Home Loan
  • Can a Co-Applicant Claim Tax Benefits on a Home Loan?

Adding a financial co-applicant can increase your loan eligibility and help you secure a higher loan amount when applying for a Home Loan. Additionally, a co-applicant can also enjoy tax benefits on the Home Loan if certain conditions are met.  

This article explores who a financial co-applicant is, the benefits of having one, how tax benefits can be availed by both applicants, and the steps involved in removing a co-applicant from a Home Loan. 

Who is a Co-Applicant in a Home Loan?

A co-applicant in a Home Loan is an individual who applies for a loan jointly with the primary applicant. The co-applicant shares the responsibility of loan repayment but does not necessarily have ownership of the property. Commonly, co-applicants are immediate family members, such as: 

  • Spouse 
  • Parents 
  • Siblings 
  • Children 

Note that friends or distant relatives usually cannot be co-applicants for a Home Loan. 

Benefits of Having a Co-Applicant in a Home Loan

Adding a co-applicant to your Home Loan application offers several benefits: 

  1. Higher Loan Eligibility: Combining incomes with a co-applicant can increase your eligibility for a higher loan amount 
  2. Lower Interest Rates: Some lenders may offer better interest rates for joint Home Loans  
  3. Shared Repayment Responsibility: The loan repayment responsibility is shared, reducing the financial obligation on a single borrower  
  4. Tax Benefits for Both Applicants: Both the primary applicant and the co-applicant can claim tax deductions on the Home Loan if they are co-owners of the property 
  5. Increased Creditworthiness: When both applicants have good credit scores, it demonstrates a higher repayment capacity and can increase your chances of securing a loan at favourable terms 

Read Also: More Benefits of Adding a Co-applicant 

Can a Co-Applicant Claim Tax Benefits on a Home Loan?

Yes, a co-applicant can claim tax benefits on a Home Loan under the following conditions: 

  1. Co-Ownership is Mandatory: To claim tax benefits, the co-applicant must also be a co-owner of the property. 
  2. Home Loan Repayment Contribution: The co-applicant must contribute to the loan repayment to avail of tax deductions.  

Under the Income Tax Act, 1961, co-applicants can benefit from tax benefits in the following ways:  

  • Under Section 80C, a co-applicant can claim up to Rs.1.5 Lakh per annum on the principal repayment 
  • Under Section 24(b), a co-applicant can claim up to Rs.2 lakh per annum on the interest paid if the property is self-occupied  
  • For a rented property, there is no upper limit for interest repayment deduction under Section 24(b)  

Having a co-applicant in a Home Loan can significantly increase your loan eligibility, offer shared repayment responsibility, and provide both applicants with tax benefits, provided they are co-owners of the property. Before applying for a joint Home Loan, ensure that both applicants understand their financial responsibilities and the eligibility criteria for tax benefits. 

FAQs

FAQs

No, you generally need the co-applicant's consent and an NOC to proceed with the removal.

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DISCLAIMER:

While care is taken to update the information, products, and services included in or available on our website and related platforms/websites, there may be inadvertent errors or delays in updating the information. The material contained in this website and on associated web pages, is for reference and general information purposes, and the details mentioned in the respective product/service document shall prevail in case of any inconsistency. Users should seek professional advice before acting on the basis of the information contained herein. Please take an informed decision with respect to any product or service after going through the relevant product/service document and applicable terms and conditions. Neither Bajaj Housing Finance Limited nor any of its agents/associates/affiliates shall be liable for any act or omission of the Users relying on the information contained on this website and on associated web pages. In case any inconsistencies are observed, please click on contact information.

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