If you are a salaried individual trying to make both ends meet, having your own house or being the owner of a small property is perhaps a cherished dream. You compare home loans periodically, but that dream for you seems out of reach, even if you are stretching yourself to save up for the down payment of your home someday. This is not because of home loan interest rates but the fact most lenders have rather stringent eligibility criteria for aspiring borrowers. If you have taken a step back owing to such rules, you can enhance your eligibility by applying for a joint home loan with your spouse. Here’s why:
What lenders want
Before we delve into why a joint home loan application makes sense, let us tell you what are the expectations of a typical lender from a home loan borrower. There are several types of home loans in India. The repayment capability of a borrower and home loan interest rates are assessed by taking into consideration various factors such as income, assets, liabilities and job stability. An ideal borrower should be within 25-40 years of age and should be employed with a large or recognized public or private sector company.
The lender will also look at the current assets and liabilities of the aspiring borrower and expect that including the EMI for the loan that he has applied for his liabilities are not shooting up beyond 45-50% of his monthly income. Lastly, it will take into consideration his credit score, which is barometer for his past credit service track record. The application of any individual with a score of below 750 (out of 900) is likely to be rejected. past.
How to enhance loan eligibility
Often, a young individual is unable to qualify under the above-mentioned criteria If you think that the above criteria too difficult to meet, an easy way to access a home loan is by making an application jointly with a family member. By making an application with a co-applicant, your eligibility can increase manifold and may even qualify you for cheaper home loan rates. Joint loans can be co-applied for with blood relatives (parents or siblings) or your spouse.
The impact on repayment tenure
If you choose to apply for a home loan with your spouse, the tenure of your loan tenure can be stretched to a maximum of 20 years. This is however subject to the age of the older among the applicants. On the other hand, if you wish to co-apply with a parent or your siblings, the tenure of the loan cannot exceed 10 years. Also in case a working parent is a co-applicant on your loan, the repayment tenure may be restricted to the number of years he or she has left in service.
Greater tax benefit
The most obvious benefit of making a joint home loan application is the ability to reduce your taxable income. By making an application for a joint home loan for a self-occupied property, you and your co-applicant can individually claim tax benefits on the repayment of the principal amount under Section 80C as well on interest payment under Section 24 of the Income Tax Act. With a tax deduction of up to ₹1.5 lakhs each under Section 80 C of the Income Tax Act and ₹ 2 lakhs under Section 24, you could both reap tax deduction benefits of up to ₹ 7 lakhs annually, thus enhancing tax benefits.