Everyone wishes to have their own dream house. Just in case you do not have adequate funds to buy your dream property, it could create a gap in turning your dreams to reality. Here in this situation, home loans can come to your rescue. These days every household has at least two earning members; hence, in this case, a joint home loan can be the best option for you to buy your dream house.
As there are two sides of the coin, similarly joint home loan has both pros and cons. To help you out to make the best decision here we bring you the advantages and disadvantages of taking a joint home loan.
Pros of taking a joint home loan:
A higher loan amount
As you can take a joint home loan with any one of the following:
- Unmarried daughter
This increases your total income as the repayment capability is higher. Usually, the banks would allow you to get a loan of up to Rs 51.82 Lakh while the rate of interest would be 10%. In case you are a co-borrower, and your joint earnings are Rs.1.5 lakhs per month then, you can access for a Home Loan of up to Rs78 lakh.
The banks do consider to calculate the EMI on your loan and the income ratio. The higher this ratio is, the more is the risk on the bank’s head to provide you a home loan.
You can enjoy tax benefits
The time when you apply for a joint home loan, both the applicants individually get the opportunity to avail the tax exemption. While in the case of joint home loans, the collective tax deduction is always high.
Concession over the interest rate
If you are willing to make a female member of your house the co-applicant you can get added interest concession on your home loan. Also, a must-know condition for you is that the women who apply for such a loan should also be the co-owner of the house. Required KYC documents are needed to be submitted for the proof in these cases.
Ease in repaying the loan
You automatically become eligible for a higher sanctioned amount of loan, as you are applying for a joint home loan. It depends upon the understanding of the co-applicants in what ratio they would be paying the interest as well as the loan amount. Thus, giving you the complete choice and flexibility of repaying the home loan.
Cons of a joint home loan
Delay in the documentation process
Since there are two applicants, hence the time required for documentation thereby increases. To ensure the documents are genuine and do not have any misguiding information, banks take a longer duration of time to verify all the necessary details.
Can adversely impact the credit score
In this loan with great flexibility comes the great disadvantage of a negative impact on the credit score. In case, any of the co-applicant fails to pay his/her pre-decided share of installment, both the applicants will face the negative consequences of the callousness.
The exceptional cases
You should be aware of the fact the benefit of a joint home loan is only applicable when you do not have any other property (house) on your name. If you have another property, the other is by default considered to be rented. In such a situation you would be paying income tax on the income you actually even have not received, and thus this becomes a major liability over your head, and joint home loan is not a good idea for you.
In matters of a family dispute or divorce or death of an applicant
In case of a separation, if the husband/wife wants to withdraw from the agreement, he or she can do so, but in that situation, it becomes the liability of the first applicant to repay the full sum. If in case the borrower is unable to do that legal action could be taken against both of the applicants.
Also, in case of the death of one of the applicants, it becomes the responsibility of another applicant to complete the remaining installments.
Thus, a joint home has its perks and negatives. It is your responsibility if you are competent to handle a joint home loan; it can be of great advantage to you.