Purchasing a residential property is one of the significant financial decisions for a first-time homebuyer. Affordable home loans are essential to fund this considerable expense. However, purchase a residential property on your own puts the sole responsibility of the housing loan on you, which could pose as a financial burden. With the number of double-income households rising steadily in India – more couples prefer opting for joint home loans instead. Hence, before avail a joint home loan, know how to maximise your benefits with a co-borrower.
Maximise Loan Eligibility with a Joint Home Loan
Availing home loans jointly increases the overall loan eligibility as the repayment capacity increases, which now includes the income of your co-applicants income. For instance, let;s consider you are about to purchase a property worth Rs. 1 Crore. Your lender is willing to fund 70-80% of the property’s value (Loan to Value). Now, if your sole income does not meet the requirement, you might seek a property with lower worth. However, if you apply for a joint home loan along with your spouse, who also draws a substantial salary every month – your joint income will be taken into consideration to determine the repayment capability and thereon, the loan amount.
However, try not to exceed 35% of your net monthly income on EMIs. Anything more than that limit could lead to financial stress – especially when the EMIs rise from an increase in interest rates. Hence, use a home loan eligibility calculator to determine your eligibility before applying for a home loan jointly.
Make Repayment Easier
In case of joint home loans, the EMI payments can be made from a joint account via cheques or ECS (electronic clearing system). Co-borrowers can share the number of EMIs between them, either in alternative months or via ECS from a joint account. Keep in mind, repaying joint home loans is a collective responsibility. Use a housing loan EMI calculator to calculate the monthly payment amount in advance and eliminate the chances of missing an EMI payment.
The loan tenor of joint housing loans also depends on your co-borrower. If you are applying with your spouse, the tenor can extend up to 20 years. This is why you should opt for a home loan jointly. You can consider availing joint home loans from lenders like Bajaj Finserv who offers high credit amount of up to Rs. 3.5 Crore. Plus, you get to enjoy flexible repayment, quick approval and fast disbursal of the loan amount. Moreover, you may get offers on current home loan interest rates.
They also provide pre-approved offers that make procuring loans quick and hassle-free. These offers are applicable on secured and unsecured credits like home loans, personal loans, business loans, and on numerous other financial products as well. You can check out your pre-approved offer by sharing a few necessary details like your name and contact number.
Tax Benefit on a Joint Home Loan
If you apply for a housing loan jointly, both the applicants can claim tax benefits while servicing a home loan. For instance, if co-borrowers service a loan jointly in equal proportion – each of the co-applicants can claim tax benefits of up to Rs. 4 Lakh jointly on interest payment. Availing tax deductions helps reduce the overall financial burden. Lower home loan interest rates in addition to such tax deductions can help make substantial savings.
Borrowers can also avail tax exemptions on the loan interest paid of up to Rs. 1.5 Lakh under Section 80C. But, for joint applicants, each one of you can claim this benefit separately. Hence, the combined limit stands at Rs. 3 Lakh, which again considerably reduces the overall cost of the loan. This is how you can get tax benefits on a joint home loan.
Applying for home loans with a co-borrower enhances your house-buying options. It provides much flexibility in the loan acquiring and repayment process, and helps you purchase your dream residence without overburdening your future.