Home Loan

A rising number of Indians have considered purchasing residential real estate property jointly with their spouses for various associated benefits. The increasing drive in including the spouse as the co-owner of a property or as a co-applicant in a joint home loan also allows the primary applicant of a home loan to share the financial burden of repayment.

Additionally, individuals can also opt for a joint home loan to benefit from specific tax exemptions to avoid paying more as per the determined repayment schedule of the loan. Applicants should, therefore, be aware of the wide range of benefits related to joint home loans with a co-applicant such as a spouse.

What are the advantages of availing a home loan with a spouse?

A joint home loan with a salaried co-applicant primarily reduces the chances of defaulting, which encourages lenders to disburse the credit while considering a higher number of applications for such financial assistance. Individuals can additionally use a joint home loan eligibility calculator.

Apart from that, individuals applying for a joint home loan can benefit financially in the following ways –

Higher loan amounts

Individuals who avail a joint home loan jointly with their spouses are likely to be eligible for higher loan amounts to finance the residential property purchase. As lending companies consider the combined repayment capability of salaried co-applicants of a joint home loan, they disburse significantly higher loan amounts with respect to single applicants.

Additionally, financial institutions offer higher Loan-To-Value (LTV) on the property, which is also higher than that offered to single applicants. This also suggests that joint home loan applicants are required to pay lower down-payment amounts while availing such credits, thereby reducing their immediate financial burden.

Reduced rate of interest

One can get a significantly lower home loan interest rate in case of joint home loans. The rates of interest on these credits are affordable because the financial risk to the lender is minimised due to the combined repayment capability. Joint home loans are an effective financial tool to reduce home loan tenor and EMI due to the decrease in the interest rate.

Co-applicants should also use an online EMI calculator to gather an idea about the loan repayment schedule. In addition, certain HFCs offer attractive interest rates when the co-applicant of a joint home loan is a female. Women applicants also benefit from concessions on stamp duties and registration fees.

Tax benefits

  • Co-applicants can benefit from tax exemptions on a joint home loan's principal and interest component. Borrowers are eligible for tax benefits on joint home loans under Section 80C and Section 24(b) of the Income Tax Act, 1961.
  • As per Section 80C, individuals can opt for tax benefits of up to Rs.1.5 lakh on the principal amount of the home loan. In case of a joint home loan with two applicants, the benefits add up to Rs.3 lakh.
  • U/S 24(b), individuals are eligible for tax exemptions of up to Rs.2 lakh on the interest component. Joint home loan applicants are eligible to benefit from a combined interest exemption of Rs.4 lakh.
Individuals should thus avail joint home loans from financial institutions to benefit from higher loan amounts, low interest home loans, tax benefits under Section 80C and Section 24(b). Individuals who have insufficient credit scores can also increase their chances of receiving a joint home loan by co-applying with their spouse with eligible credit ratings as stipulated by a financial institution.