If you are looking at the possibility of taking a home loan and have an option of a joint home loan, go for the same. Joint home loans offer many benefits. In fact, it is more advantageous to take a joint home loan. Here are some of these benefits.
1) Joint home loans increase the eligibility amount
One of the advantages of a joint home loan is that it increases your eligibility amount.
If you are taking the loan with your spouse, the bank or the housing finance company will take both the income of both the applicants. So, you can split the Rs 50 lakh loan into amounts of Rs 25 lakh each for both the co-applicants, thus ensuring that your loan is sanctioned for a higher amount.
2) Joint home loans and CIBIL score
The one advantage of a joint home loan is that if one applicant has a bad credit score, it can be compensated by the good credit score of the other applicant. CIBIL credit score is one of the most important criteria and takes into account creditworthiness, based on past defaults of loans amounts etc.
You can check your CIBIL score and that of the co-applicant before applying for a home loan.
3) Tax benefits
Home loans offer tax benefits on the interest and the principal amount paid. The principal amount qualifies for tax benefits under Sec 80C of the Income Tax, up to a sum of Rs 1.5 lakhs per annum. Interest income on the other hand qualified for tax exemption up to R 2 lakhs.
So, together these exemptions total as much as Rs 3.5 lakhs per individual per annum. By taking a joint home loan the available exemption automatically increases to Rs 7 lakhs in total. This is a superb way to save money.
Obligations of the home loan applicants
In case of joint home loans, there is an obligation on both the holders to complete the entire portion of the loan. For example, if one applicant cannot pay the installments then the other has to step-in. It has to be remembered that the bank or the financial institution is interested in the entire amount of the loan. If that cannot be honoured then thee concerned institution will proceed for recovery as is the norm.
While making an application the usual set of documents like pertaining to KYC would be applicable.
The one disadvantage of a home loan is that if even one of the applicants default, both the applicants credit rating would be hit.
Of course, but, the advantages like higher loan amount and tax benefit are far higher which clearly outweigh the disadvantages.
So, in short if you have the opportunity to go in for a joint home loan, please do that.