Joint home loans: To do or not to do?

We have all heard of home loans haven’t we? The banks take into consideration the eligibility criteria before sanctioning a loan. A borrower must be at least 21 years of age and at most 60 years of age to avail a loan. However the age criteria vary from bank to bank.

Also the borrower must have a high CIBIL score, usually above 750 to be within the eligible bracket to receive a loan. Once the borrower is proved eligible, he/she is entitled to a maximum loan amount of 60 times his/her monthly net income. For example if Mr. A who is 30 years old earning a monthly income of Rs. 80,000/- applies for a loan, he will be entitled to an amount of Rs. 48,00,000/-.

What if Mr. A is looking to buy a flat worth 1.5 crore? So where does he acquire the balance from, to pay for his house? This is where joint home loans come in. He can take joint home loans with his spouse, sibling, parent or son. The one who jointly takes a loan with him is called the co-applicant.

The banks then take the joint monthly income of the co-applicant and the borrower and club it as one, increasing the loan amount the borrower and the co-applicant are entitled too. This means that the co-applicant also has the responsibility for the repayment of the loan. This indeed will make it far easier for Mr. A to buy the flat that was always on his mind. The borrowers can claim the interest paid on the loan as a deduction under section 80c in the ratio of the interest paid. However if the co-applicant has a poor CIBIL score, the banks will not consider his/her score and the amount the borrower is entitled to,won’t increase.

Usually there is a lot of ambiguity between the definition of a co-applicant and a co-owner. A co-owner includes the owners of the concerned property to be purchased. A Co-applicant is the person who jointly takes a loan along with the borrower. Banks insist all the co-owners be co-applicants mandatorily. On the other hand, co-applicants don’t necessarily have to be co-owners.

It is always better to go in for a joint loan, if the loan required is exorbitant. One should keep in mind that a higher loan is accompanied with a greater interest over a period of time. On the other hand, if the borrower has the capacity to make a huge down payment, he shouldn’t go for a joint loan and must opt for single home loans, thus saving on the total cumulative interest and the risk to pay the bank more.

{Source: https://www.indiabullshomeloans.com/blog/joint-home-loans-to-do-or-not-to-do/}