All you need to know about joint housing loan
High real estate prices are making home loan eligibility difficult for young buyers. This problem can be overcome by going in for joint housing loan.
What is Joint housing loan?
Joint housing loan is where you apply for home loan with another person as co-applicant. Income of both applicants is added together while calculating home loan eligibility, thus you are eligible for higher loan amount.
Example: Raj and his wife are having monthly income of Rs 80,0000 and Rs 60,000 respectively. If Raj applies for a home loan, then he will be eligible for home loan of approximately Rs 40 Lacs.
If Raj applies for a joint housing loan along with his wife, then both their income will be added together while estimating home loan amount. Their joint income is Rs 1,40,000, so they will eligible for home loan of approximately Rs 70 Lacs.
Who are eligible to be co-applicant for joint housing loan ?
Husband and wife
Father and son
Father and unmarried daughter
Mother and unmarried daughter
Bank may ask the co-applicant also to be co-owner of the property in certain cases.
Who are not eligible to be co-applicant for joint housing loan?
Brother and sister
Friends and cousins
Tenure of joint housing loan
Tenure of home loan will depend on the retirement age of oldest member among the applicants.
Case 1: You and your wife are co-applicants for a joint home loan and your age is 30 and 28 years respectively, thus you are the oldest applicant. Your retirement age is 60 years so you will be eligible for maximum loan tenure of 30 years.
Case 2: You and your father are co-applicants and your age is 25 and 50 years respectively, thus you are father is oldest applicant. Your father’s retirement age is 60 years so you will be eligible for maximum loan tenure of 10 years.
Interest rate on joint home loan
Interest rate on joint home loan will be same as that offered to individual home loan buyer's. If your wife is co-applicant and also co-owner of the property, then your joint home loan will be eligible for lower interest rates being offered to women home loan buyers
Documentation and credit score
Both co-applicants have to submit documents for proof of identity, income, age and residence.
Home loan lender will check credit score of both the applicants. In case credit score is low of either of the applicants, then there are chances of your home loan application being rejected. Better check credit score of your co-applicant before applying for home loan.
Tax exemption under section 80C and 24C on joint home loan
Both co applicants are eligible for tax exemption for principal and interest payment, if both are co-owners of the property. Individually both can claim exemption upto Rs 1,50,000 (Section 80C) for principal payment and Rs 2,00,000(Section 24C) for interest payment.
Tax benefit on actual principal and interest payment will be split between co-applicants, depending on their proportion they own in the property.
Example: Raj and his wife are having 60% and 40% ownership in property. They have availed loan of 50 lacs. Thus loan availed is split into 30 lac and 20 lacs between raj and his wife.In first year they have to pay Rs 65,000 as principal and 4,00,000 as interest.
Tax exemption which Raj can claim on joint home loan
Principal payment = 60% of 65000 = Rs 39,000
Interest payment = 60% of 400000= Rs 2,40,000
Raj will not be able claim entire Rs 2,40,000, since interest rate payment is caped at Rs 2,00,000 under section 24C.
Tax exemption which Raj’s wife can claim on joint home loan
Principal payment = 40% of 65000 = Rs 26,000
Interest payment = 40% of 400000= Rs 1,60,0000
Important points to remember before going for joint housing loan
1. Both co-applicants are equally responsible and liable for the home loan.
2. If one applicant defaults then credit score of the other member will also be affected.
3.In future if one co-applicant suffers a job loss then EMI burden will fall on the other applicant. Suppose your wife is co-applicant and she has to leave her job due to maternity issues then you may have to pay entire EMI.