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Nowadays, every person dreams of having his own home, where he can live a peaceful life with his family. But due to skyrocketing property prices in the metros and big cities of the country, buying a dream home on your own has become no less than a big challenge. If you are also worried about your budget and are looking for more home loan to buy a bigger house or villa, then this great option from the banking sector can prove to be very helpful for you. Banks and housing finance companies now provide the facility of ‘Joint Home Loan’, through which you can easily get a huge loan with two or more people instead of alone. This financing option not only increases your loan eligibility manifold, but also proves to be extremely effective in saving tax and availing low interest rates. With proper planning and knowledge, getting your dream home is no longer a difficult task if you apply for a joint home loan.
What is Joint Home Loan and how it strengthens your loan eligibility
Joint home loan is a financial arrangement in which two or more people jointly take a home loan from the bank. Usually, this type of loan is taken jointly by husband and wife, parents and children or siblings. When you apply for a home loan alone, the bank decides the maximum loan limit after considering your current income, CIBIL score, monthly expenses and other liabilities. But when you add your spouse or any earning member of the family as a co-applicant or co-borrower, the bank approves a larger loan amount considering the combined income of both of them. This means that the house which you were not able to buy due to your limited salary, can now be easily booked on the strength of combined income in a big budget and in a prime location.
Saving Tax Benefits: Great benefits are available under the Income Tax Act.
The biggest and most attractive advantage of taking a joint home loan is that it leads to huge tax savings. According to the current Income Tax Laws of the country, if husband and wife are both employed separately and have taken a joint home loan, then both of them can claim tax exemption individually. Under Section 80C of the Income Tax Act, a rebate of up to Rs 1.5 lakh per person is available on principal repayment of home loan, which can lead to a combined savings of up to Rs 3 lakh. Apart from this, there is a provision of tax exemption of up to Rs 2 lakh per person on home loan interest payment under Section 24. If both the co-applicants are also co-owners of the property, they can reduce the tax burden to the tune of thousands and lakhs of rupees annually by availing these deductions in separate income tax returns.
Complete list of eligibility and required documents for Joint Home Loan
It is mandatory to have certain eligibility criteria and documents to get a joint home loan from any bank or financial institution. First of all, all co-applicants should have a strong CIBIL Score, ideally a score of 750 or above helps in getting the loan approved easily and at a lower interest rate. Additionally, all applicants must have a regular source of income, whether salaried or self-employed. Talking about the required documents, KYC documents of both the applicants like Aadhar Card, PAN Card, passport size photo and residential certificate are required. Along with this, bank statement of last 6 months, salary slip or Income Tax Return (ITR) of last two years, Form 16 and all legal documents related to property have to be deposited in the bank. The clearer this entire process of documents is, the faster the loan will be approved by the bank.
Future financial security and wisdom in loan repayment responsibility
It is very important to take special care of some things while taking a joint home loan so that any kind of family or financial dispute can be avoided in future. Since all the co-applicants in this loan are equally and severally liable to repay the loan, if there is a disruption in the income of one, the other may have to pay the EMI. Financial experts advise that before taking the loan, it should be decided as to who will contribute the monthly EMI. Apart from this, the property ownership share agreement should also be made clearly so that there is no legal confusion in the future. In short, if you are dreaming of buying a big and luxurious house with your family, then a joint home loan taken with wisdom and proper planning can prove to be an excellent and prudent financial decision for you.