Joint home loans often come off as a breather for many home loan aspirants, especially for those facing difficulties in getting them approved single-handedly. While in most cases it's not mandatory to have a co-applicant while applying for a home loan, doing so has not one but multiple benefits. For those who are looking forward to purchasing a property, listed below are the reasons why opting for a joint home loan would be a good move:
Overall loan eligibility gets enhanced
Insufficient income, low credit score, high debt to income ratio, etc. often create hindrance in approval of sole applicant's home loan application. In such cases, opting for a joint home loan can give a boost to the overall loan eligibility. When you add a co-applicant with stable income, strong credit score and satisfactory repayment capacity, your chances of loan approval becomes higher. Given that lenders take into consideration combined income of joint loan applicants while deciding the loan amount, you can also avail higher loan amount, if required.
Avail higher tax benefits
You can avail tax benefit on both principal and interest repayment under section 80C and 24b, respectively. While principal repaid can be claimed up to Rs 1.5 lakh in a financial year, interest repayment can be claimed up to Rs 2 lakh in a financial year for self-occupied property. No cap has been placed for interest repaid for let out property. On availing a joint home loan, co-borrowers can separately claim these tax deductions, provided they are also the co-owners of the property. Remember that being just a co-borrower and not co-owner of the property would deprive you of the associated tax benefits, even if you have been contributing towards the EMI repayment.
Additional deduction of Rs 1.5 lakh on interest payments made on home loans availed during the period of 1st April 2019 to 31st March 2020 was introduced in the Union Budget this year. This can be claimed over and above Rs 2 lakh deduction available on interest payments made on home loans by first time borrowers, hence enhancing the total interest deduction to up to Rs 3.5 lakh in a financial year. Joint home loan borrowers would be eligible to claim this deduction separately.
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Concessional interest rates with woman co-applicant
You can avail concessional interest rate on home loans if you apply for a joint loan with a female co-applicant. Lenders usually offer concessional interest rate to female home loan applicants, with usually up to 5 basis points (0.05%) lower interest rate than the standard applicable interest rate. However, keep in mind that some lenders may require the woman to be both co-owner as well as co-applicant in order to avail the concessional interest rate on home loan.
Lower stamp duty charges for woman
Registering your property in a woman's name, either as sole owner or joint owner, can help reduce stamp duty charges. Although the stamp duty charges vary from state to state, some states usually provide 1-2% lower stamp duty fees for woman. Remember that the stamp duty, registration fee and other expenses that are directly related to transfer of property, are eligible to be claimed as tax deduction under Section 80C, with a maximum cap of Rs 1.5 lakh in a financial year. Keep in mind that this deduction has to be claimed in the same year in which such expenses have been incurred.
(By Ratan Chaudhary, Head of Home Loans, Paisabazaar.com)