Purchasing a house is a major financial decision. It requires large investment due to high property rates across leading cities in India. Higher property rates would mean higher loans but sometimes, single income is not enough to make one eligible for a higher amount that one requires. Under such conditions, a joint home loan is a suitable option which helps you to get higher credit/loan. In simple terms, it just means 2 applicants applying for a home loan to purchase a house. With additional income of the co- applicant being considered for eligibility, the affordability towards availing a home loan shoots up
Most lenders consider the following parties as eligible co-applicant of a joint home loan:
Sisters, brother-sister, cousins, friends and unmarried partners may not be considered as eligible co-applicants.
The tax benefits are computed on the basis of the proportion of home loan taken by the co-applicants. For example, if there are two co-applicants who have taken a joint home loan of Rs.20 lakh (where the first applicant is sanctioned Rs.12 lakh based on his borrowing ability and the second applicant is sanctioned the balance Rs.8 lakh), the proportion of borrowing is 60% (first applicant) and 40% (second applicant). In this case, 60% of the loan repayment and interest paid is considered as the tax benefit available for the first applicant, while the balance 40% is the tax benefit available for the second applicant.
By taking a joint home loan, the co-applicants can claim higher tax benefits than the benefits that can be taken by a single applicant. Here is an example to explain this:
Type of Home Loan | Annual Interest Payment | Maximum Tax Benefit (under Section 24 of the Income Tax Act) |
---|---|---|
Home Loan taken by individual applicant | Rs.4.0 lakh | Rs.1.5 lakh |
Joint Home Loan taken by two co-applicants (in equal proportion) | Rs.4.0 lakh | Rs.1.5 lakh each or Rs.3 lakh on combined basis |
As seen above, in case of joint borrowing, higher tax savings are possible. To avail the tax benefits, you need to furnish a home sharing agreement indicating the ownership proportion on a stamp paper.
A home is one of the most important assets that you will purchase; don’t compromise on it due to cost. Avail a higher loan by borrowing jointly to buy the home you deserve.
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