Buying a home comes with a lot of financial planning and saving. While most times the banks come to our rescue in the way of a home loan, there are certain rules that bank follow to approve a loan.
As a thumb rule normally most of the banks/HFCs (Housing Finance Companies) have a provision that one should be left with at least 50% to 60% of income after repayment of monthly loan instalment, to take care of the family expenditures.
If you are in a similar situation, you can apply for a home loan in joint name.
Applying jointly for home loan increases the amount of loan that bank can sanction for people to buy home.
Moreover, banks or HFCs (Housing Finance Companies) feel comfortable to sanction the loan in joint name because of greater security for the lender in view of the option to take recourse to either of borrowers.
Besides improving your loan eligibility and enabling you to get a larger amount of loan, co-borrowers are eligible for deductions under the Income Tax Act. Both the borrowers can claim deduction, to the extent of their share in the loan, subject to the condition that they are joint owners as well.
There are also deduction grants for interest of up to Rs150,000 per year on a loan for acquiring a residential house. This deduction is available individually to both the co-borrowers. To be eligible for the deduction, the home loan needs to be taken in joint names, property be owned and financed jointly in equal shares, with both spouses being joint owners.
All the co-borrowers or joint-borrowers are jointly and severally liable to repay the loan availed from the bank/HFC, subject of course to the terms and conditions stipulated in the loan agreement. Thus, before volunteering to become co-applicant in a loan transaction, it is advisable to properly understand the implications of such decision.