Benefits of joint home loan

Many lenders offer new borrowers home loans at enticing rates of eight to nine percent. With property prices going through a correction, there could be no better time for investing in real estate. Households where both husband and wife go to work can take advantage of joint home loans.

Here's how borrowers benefit by applying jointly:

Increased loan eligibility

The incomes of the applicants (husband/wife or father/son) are clubbed together when calculating loan eligibility. Consider a person whose gross monthly income is Rs 40,000. A banker will be willing to lend him Rs 18 lakhs. But, suppose the house costs Rs 30 lakhs. Clubbing the income of his spouse is the only option left to increase his loan eligibility. Assume, his wife brings home Rs 35,000 every month. They can pool their incomes and get an increased amount of Rs 32 lakhs. Applying jointly has made the borrower eligible for a bigger loan amount here.

Borrowers need not be constrained by money and settle for a smaller house. Need for space increases with time as the family grows. You need not settle for a smaller dwelling now and later contemplate selling it and buying a larger one.

Tax advantage

Home loan applicants are eligible for tax rebates under Section 80C for the principal amount repaid and under Section 24 for interest repayment. These tax deductions are capped at Rs 1 lakh for the principal repaid and Rs 1.5 lakhs towards the interest component. Joint loan applicants can avail maximum tax benefits. They can repay the lender Rs 1.50 lakhs towards the principal component of the loan and Rs 3 lakhs towards the interest repayment in a particular year.

Co-borrowers, who are also co-owners, are eligible for tax rebate in the proportion of their share in the loan. If they have equal shares in the loan repayment, they can individually claim Rs 75,000 deduction under Section 80C towards principal repayment. They can claim Rs 1.5 lakhs each under Section 24 towards the interest repayment.

During the initial years of a loan tenure, joint loan applicants avail maximum benefits towards their interest repayments. Towards the end of their loan tenure they take maximum tax advantage of repayments on the principal component.

If you are not married, you can apply jointly with your parents in case they are working. Banks insist that all co-owners be co-applicants. Borrowers must keep in mind that if they are neither the owner nor the co-owner, they will not be eligible for any tax benefits on the loan repayments.

Even if your spouse doesn't have a steady salary, but a regular income source from say tuitions, most lenders take the additional income into account, while arriving at loan eligibility. Joint home loans are the easiest way to invest in your dream house that costs more than the loan eligibility from a single income.