Should You Say Yes Or No to A Joint Home Loan
It is common for people to co-apply for a home loan with a family in most cases, such as with a spouse, parent etc. But is it worth taking a joint home loan? Should you say yes or no to it?
Read on as we unfold the benefits and drawbacks of adding a co-applicant to take a joint housing loan, which you can check with HDFC Home Loan Customer Care as well before submitting the application to them.
Who all are eligible to become a co-applicant?
Co-borrowing a home loan is subject to a certain set of terms and conditions. Lenders usually accept only a few relations as your co-applicant. These generally include immediate relations such as father, son, mother, daughter, spouse, sister and brother. However, it entirely depends on the lender’s rules and regulations regarding the valid relations which can be approved to become co-applicant.
For instance, some lenders may not allow siblings to become co-borrowers of a home loan, fearing future property disputes later on. You can contact ICICI Home Loan Customer Care or HDFC Home Loan Customer Care to enquire about the same.
However, it’s important to note that it’s solely the lender’s decision to accept or reject a co-applicant, and therefore would vary on case to case basis and also amongst different lenders.
The benefits of including a co-applicant
Enhances loan eligibility
When applying for a house loan as a single borrower, many people have trouble getting their applications approved. This is primarily due to the fact that they do not meet the numerous eligibility criteria, which might include a minimum income, a ratio of debt to income, a credit score, and so on. When this occurs, adding a co-applicant to your loan application might boost your eligibility for a loan and potentially help you obtain a greater loan amount.
When you take out a joint home loan with a credit-worthy co-applicant, your eligibility for a loan improves. This is due to the fact that additional factors, such as the co-credit applicant’s score, income, capacity to repay the loan, etc., are taken into consideration when evaluating the home loan application.
There is a greater likelihood of obtaining approval for a shared loan if the lending institution is convinced that the co-applicant is capable of meeting the requirements outlined in the previous clause. If the borrower and the co-applicant have a debt to income ratio that is greater than 40-50 percent, lenders may be hesitant to lend to them or may even lend at a higher interest rate. You can contact the ICICI Home Loan Customer Care to enquire about the EMI to income ratio preference for co and primary applicants.
Higher total tax benefits
The majority of people who are looking to buy a property are aware of the tax benefits that are available for home loans, which are outlined in sections 80C and 24b of the Income Tax Act. These can also be confirmed by calling HDFC Home Loan Customer Care. Under section 24b, the borrower is eligible for a deduction of up to two lakh rupees per year for interest that they have paid back to the lender. However, a deduction can be taken for the amount of the principal that was repaid under section 80C but only up to a maximum of Rs. 1.5 lakhs each year.
Both of them are able to take advantage of these tax benefits if they apply for a house loan along with a co-applicant and do so in a joint capacity. However, in order for the co-borrower to be eligible for the tax benefit, he or she must also be a co-owner of the property that the home loan is being used to purchase. If you feel unsure or confused then check with ICICI Home Loan Customer Care before submitting the application.
The tax benefits are available to those individuals who are co-borrowers as well as co-owners of the property. In the case of joint house loans, both the primary borrower and the co-borrower are eligible to make individual claims for the tax benefits.
Reduced rates of interest for women who co-apply for loans
The majority of loan providers provide women who co-apply for a house loan with access to special interest rates. The difference between these rates and the regular rates offered by the lender is often somewhere around 5 basis points. In order for women to be eligible for this benefit, they must not only be the primary applicants for the home loan but also the single or joint owners of the property that is being financed.
However, the majority of banks will only accept women as co-applicants if the woman is either the owner or co-owner of the property in question or if her income has been taken into consideration when determining whether or not the borrower is eligible for the loan and their ability to repay it. It is best to check with HDFC Home Loan Customer Care to be clear about the existing conditions to rope in or apply with a woman co-applicant.
Watch aware of the possibility of a negative impact on your credit score
When you apply for a house loan with a co-applicant after enquiring with ICICI Home Loan Customer Care, you still run the significant danger of having your credit score lowered, even if you haven’t done anything wrong yourself. When the principal borrower of a home loan fails to make a payment on time, is late with a payment, or misses a payment altogether, the credit score of the co-applicant is negatively impacted. If the principal borrower were to pass away or declare bankruptcy, the co-applicant would be obliged to shoulder the entirety of the financial responsibility associated with the loan’s repayment.
Before agreeing to be a co-signer on a loan, it is imperative that you contact HDFC Home Loan Customer Care for assistance and also conduct a thorough investigation into the reliability of the primary borrower, as well as the associated risks and responsibilities to which you, as a co-signer, would be subjected. Not only will the credit score of the co-applicant suffer, but in the event that the primary borrower does not pay back the loan, the co-applicant will also be responsible for paying back the remaining balance.