The percentage of home loan lending rate is rising year-on-year owing to exponential growth in the real estate sector. However, concerning the average financial portfolio of Indian citizens, it might get difficult for some to bear the total cost of a home loan.
Joint home loans come as an affordable alternative. It not only eases the process of availing advances but also allows both the co-applicants to avail home loan tax benefit individually. Discussed below are some of the benefits of joint home loans that you should know about.
- Improves your home loan eligibility
Adding a co-applicant to your home loan secures your way of availing a loan. Financial stability and CIBIL score of the co-applicant will be taken into consideration while applying. Hence, while you avail a joint home, you must analyse your repayment capability of your co-applicant to ease the repayment process.
- Women co-applicants can enjoy lower interest rates
Women can also enjoy the benefits of taking a joint home loan. You can appoint a female co-applicant to avail advances at a lower interest rate (lower by a few basis points) to cut down the total cost of your loan.
To avail such lower home loan rates, it is necessary for the female applicant to also be a joint owner of your property. Various financial companies offer joint home loans at minimal interest rates.
- Lowers the burden on your pocket
In case of joint home loans, the repayment responsibility lies with both the co-applicants. Therefore, it reduces the burden as the EMIs are divided between the co-applicants and lowers the home loan rates as well. Besides, you can choose to repay your amount separately or from a joint account.
- Eases the documentation process
The documents that you are required to submit are –
- KYC documents such as Aadhaar card, PAN card, driving license, passport, voter ID, etc.
- Address proof such as ration card, electricity bills, water bills, gas bills, telephone bills, etc.
Additionally, you are also required to submit your income proof. In case of a joint home loan, you can submit the income proof documents of only the co-applicant whose financial portfolio will be taken into consideration which increases your chances of loan approval.
- You get to avail tax benefit
Joint home loans also provide you with home loan tax benefits that can be enjoyed by both the co-applicants individually. You can claim deductions of up to Rs. 2 Lakh under Section 24(b) of the Income Tax Act on the amount payable against the interest of your home loan. Both the applicants can claim benefits individually of up to the above mentioned limit.
For example: Mr. A and Mr. B are the co-applicants of a home loan. Now, the interest paid against the loan is Rs. 5 Lakh. As they have a 50:50 share in the property and loan, both Mr. A and Mr. B can claim tax benefits of up to Rs. 2 Lakh each. Therefore the tax payable amount will be Rs. 1 Lakh which would have been Rs. 3 Lakh if the loan was availed by either. You can use a home loan tax benefit calculator to determine your taxable income tax amount at the end of each financial year.
In addition, you can also claim tax benefits under Section 80C of the Income Tax Act. Under this section, you can claim exemptions of up to Rs. 1.5 Lakh per annum against the amount payable towards your principal amount.