What is a joint home loan?

A joint home loan is a type of loan taken by partners spouses and close relatives. Both borrowers are responsible for repaying the loan and are listed as co-owners of the house. The loan amount approved is based on the combined income of both borrowers.

Both co-owners are eligible for tax benefits on interest rates and principal repayment of the loan. A joint home loan can help in improving the chances of loan approval, acquiring the approval of larger amounts of home loans and better loan terms.

It is important for both co-owners to have a clear understanding of all the terms and conditions of a joint home loan before applying for one.

Are you eligible for a joint home loan?

Both the applicants applying must be at least 21 years old and not more than 60 years old at the time of loan maturity. The two applicants must have a stable source of income, and their combined income should be sufficient to repay the loan. Both applicants should also have a track record of stable income.

The ideal credit score required to apply for a joint home loan is 700 and both applicants need to be citizens of India. The loan amount eligibility will depend on the combined income of both applicants and their existing financial obligations.

It’s important to keep in mind that these are general guidelines and eligibility criteria may vary from one bank to another. Consult with your bank before you opt for a joint home loan.

Why Joint home loans are the best option for new home owners

Advantages a joint home loan can give you

• Higher loan eligibility
• Tax benefits
• Shared responsibility
• Better credit score
• Joint ownership

⦿ Higher loan eligibility

Joint home loans provide higher loan eligibility because banks consider the income of both borrowers while determining the loan amount. A higher combined income increases the ability to repay the loan. Additionally, having a co-borrower with a stable income can also increase the chances of loan approval.

⦿ Tax benefits

Joint homeowners can avail tax benefits on both interest and principal repayment. Tax deductions can be claimed up to a limit of ₹2,00,000 every financial year (under section 24 of the income tax act). Principal repayment deductions of ₹1.5 lakhs every financial year (under section 80C of the income tax act). Tax benefits can be availed by both homeowners, even if only one of them is paying the EMIs. (1)

⦿ Shared responsibility

Joint homeowners share the responsibilities of maintenance and upkeep of the property, yearly property tax and insurance payments. Other decisions like home renovation and repairs, sale of property and more need to be discussed by both co-owners. Hence both homeowners need to understand their responsibilities and obligations clearly to avoid any misunderstanding in the future.

⦿ Better credit score

A co-owner with a higher credit score can help both owners in getting better loan terms and interest rates. Simply because the owner with a good credit score is assumed to repay the loan on time. Additionally, joint loans also help improve the credit score of the co-owner with a lower score.

⦿ Disadvantages of Joint home loan

In the case of joint loans, both co-owners are responsible for repaying the loan amount. The credit score of both co-owners will be affected if payments are not made on time. Any default caused in payments by one co-owner entitles the other co-owner to make the payment of the entire amount. Furthermore, some loan requests may be declined if either one of the co-owners has a poor credit history.

It is advised that every homeowner clearly understands the pros and cons of a joint home loan before applying for one.

We at Reloy believe the joy of owning a home can bring alive a sense of achievement and fulfilment to people’s lives. Hence, we help developers in providing their homeowners with a loyalty platform that assists homeowners throughout their homeowning journey, including home loans to make their buying experience seamless and stress-free.