Purchasing a home is a significant milestone in one’s life, especially in India where property ownership is highly valued. As property prices continue to rise, many aspiring homeowners are turning to joint home loans as a smart financial strategy. But what exactly are joint home loans, and why are they gaining popularity in the Indian market?
What is a Joint Home Loan?
A joint home loan is a mortgage where two or more individuals apply for and share responsibility for the loan. These co-applicants are typically family members, such as spouses, siblings, or parent-child duos. The growing interest in joint home loans stems from their potential to offer better terms, higher loan amounts, and significant tax advantages. Let’s dive deeper into why this option might be the key to fulfilling your dream home in India.
Joint Home Loan Interest Rates 2024
| Bank | Individual Home Loan | Joint Home Loan |
|---|---|---|
| State Bank of India | 8.55% – 9.05% | 8.40% – 8.90% |
| HDFC Bank | 8.60% – 9.10% | 8.45% – 8.95% |
| ICICI Bank | 8.65% – 9.15% | 8.50% – 9.00% |
| Axis Bank | 8.70% – 9.20% | 8.55% – 9.05% |
Advantages of Joint Home Loans
Boosting Your Loan Eligibility
Applying for a joint home loan can significantly enhance your loan eligibility. Lenders consider the combined income of all applicants, which often results in a higher loan amount.
For instance, if you’re eligible for a ₹50 lakh loan individually, applying jointly with your spouse could increase your eligibility to ₹80 lakh or more, depending on your combined incomes and credit profiles.
Securing Lower Interest Rates
Joint home loans often come with the benefit of lower interest rates. Banks and financial institutions view joint applications as less risky, leading to reduced rates. Even a small decrease in the interest rate can result in substantial savings over the loan’s tenure.
Enjoying Tax Benefits
- Each co-applicant can claim a deduction of up to ₹2 lakh on interest paid under Section 24 of the Income Tax Act.
- Principal repayment deductions of up to ₹1.5 lakh each under Section 80C.
These tax benefits can considerably lower the overall cost of your home loan, making it a more attractive option for many Indian families.
Easing Repayment Responsibilities
Sharing the responsibility of EMIs with a co-applicant makes repayments more manageable. This shared burden not only makes the loan more affordable but also reduces financial stress on individuals, potentially enhancing your quality of life during the repayment period.
Selecting an appropriate co-applicant:
Choosing the right co-applicant is crucial for a successful joint home loan application. Here are some factors to consider:
- Choose someone with a strong credit score.
- Ensure they have a steady and sufficient income.
- Prefer close family members like spouse or parents.
- Look for a history of responsible financial behavior.
- Ensure their willingness to stay committed to the loan tenure.
- Verify their legal ability to be a co-applicant.
- Assess their ability to contribute to EMI payments.
- Maintain clear and honest communication regarding the loan responsibilities.
Conclusion
Joint home loans offer a compelling option for many Indian homebuyers. With the potential for lower interest rates, increased loan eligibility, and substantial tax benefits, they can make your dream of homeownership more achievable. By carefully selecting a co-applicant and leveraging the advantages of joint applications, you can potentially save lakhs of rupees over the life of your loan.
At Credit Dharma, we understand that navigating the home loan process can be daunting. That’s why we’re committed to making your home-buying journey stress-free. With our top experts, best banking partners, and super easy process, we’re here to guide you every step of the way.
Frequently Asked Questions
Yes, many lenders allow adding a co-applicant to an existing loan. This process, called loan transfer or balance transfer, may help you get better terms and interest rates.
While joint loans offer many benefits, they also mean shared liability. If one co-borrower defaults, the other becomes fully responsible for the loan. It’s crucial to choose your co-applicant wisely.
Most lenders in India prefer co-applicants to be blood relatives or spouses. However, some banks may consider unmarried partners if they’re co-owners of the property. It’s best to check with individual lenders.
A joint home loan appears on both applicants’ credit reports. Timely repayments can boost both scores, but defaults will negatively impact both. All co-applicants need to maintain financial discipline.
HDFC Home Loan
SBI Home Loan
