Finance

This is How You Maximise Your Home Loan Benefits by Applying with a Co-applicant

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This is How You Maximise Your Home Loan Benefits by Applying with a Co-applicant

It’s no secret that home loans can be a great help if you wish to buy your home but do not have sufficient funds. By availing loans to fund your home purchase, you need not deplete all your savings or wait for years to accumulate enough money to buy a house property.

However, not many know that you can maximise the benefits of a home loan by applying for it with a co-applicant. Keep reading to learn more.

Who Is a Co-applicant for a Home Loan?

The individual with whom you apply for a loan is called a co-applicant of a home loan. Your co-applicant shares your responsibilities for loan repayment and is equally liable for all the loan dues and charges.

  • You can avail the loan with your spouse, siblings and parents.
  • Lenders do not allow you to take a joint loan with your friend or a distant relative.
  • Lenders only allow brothers to take joint home loans to avoid ownership disputes in future.
  • You cannot avail a housing loan with a minor.

What are the Benefits of Having a Co-applicant?

Can avail a higher loan amount

When you avail a home loan with an earning co-applicant, the lender combines the income of the co-applicant to determine the loan eligibility. The combined eligibility is typically higher than that of individual applicants. With higher eligibility, you can avail a higher loan amount and buy a bigger or better house.

Concession in interest rates

Often lenders offer lower interest rates for women. Therefore, if you avail a home loan with your spouse or mother, you can enjoy a lower interest rate on your loan. As housing loans are high amounts, even a slight difference in the home loan interest rates can bring a significant difference in the overall loan amount. Similarly, many states charge a lower stamp duty for women than men. Therefore, you could save money by applying for a home loan with your female family member.

Tax benefits

If your co-applicant is also the co-owner and contributes to the EMI payments, they can enjoy the home loan tax benefits separately. All the applicants can enjoy the tax benefits on the principal and interest repayment under sections 80C and 24(b) of the Income Tax Act, 1961 individually.

Words of Caution!

While availing a home loan with a co-applicant, you must know that a joint home loan can adversely affect your credit score in case of default. If your co-applicant fails to pay the EMI, your credit score and eligibility can go down. Similarly, if the co-applicant does not pay his share of EMI, the entire burden of repayment would fall on you.

With joint loans, you can share the responsibility of paying the EMIs, get concessions in home loan interest rates, and stamp duty.  With timely payment of joint loan, you can also improve your credit score and enhance your eligibility for further borrowings. However, you must be aware of its shortcomings too to avoid hassles in future. So, why delay? Check your home loan eligibility and apply for a home loan today.

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Williard John is the Editorial Director at The Daily Strength Inc. Prior to joining The Daily Strength, Williard had a hand in a number of online and print publications, including InternetNews.com as chief copy editor and Government Technology Magazine as managing editor. He also did a stint in Sydney as group editor of RBI Australia's manufacturing group, which is when he also developed an affinity (a love, really) for cricket

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