A home loan is a vital and long-term decision for a permanent abode. If you and your spouse contemplating over a new house or a bigger house than the current one, you are going for a financial commitment that takes up to thirty years.
But it might happen that only one partner gets approval for the desired loan amount or dilemma at the time of payment. To sort it out a joint home loan is the best way out.
Before going ahead with the benefits of a joint home loan with the spouse, let us have an understanding of the two most commonly used terms related to joint home loan; co-owner and co-applicant.
The co-owner is your partner and share the rights of the property along with you. Whereas, co-applicant works more as the guarantor and is responsible for outstanding loan payment if the principal borrower could not pay off loans in time or met some accident etc.
Currently, most banks and NBFCs have made co-applicant a mandatory criterion to avail joint home loan in India. In some cases, your lender might ask the co-applicant to be the co-owner of the property.
Benefits of Joint Home Loan with your Partner
Shared Repayment Responsibility
Applying with your spouse makes sense from several perspectives. You can share financial liabilities monthly, repayment responsibility gets shared, and a great help in case of sudden emergencies.
Suppose you lost your job or experiencing poor cash flow in a business, your earning spouse can lend a helping hand, and EMI never gets delayed.
Loan Eligibility and Affordability
Banks and NBFCs prefer joint home loans for fund security and lesser chances of non-performing assets. You will be eligible for a higher loan amount with affordable interest rates and flexible repayment terms.
Joint home loans make sense in metro cities, Tier I and II cities of India, where property rates are exponentially higher. Two incomes increase your chances of bigger loan amount approval and ensure comfortable repayment. You stand better chances of getting discounts and special deals from the lender because of a low-risk account.
Prime Minister Awas Yojana and several other Government schemes provide preference for women. A home loan application with a wife as co-owner can get you several tax benefits, discounts on processing fees, interest, etc.
Banks and NBFCs offer slashed interest rates, therefore, reducing EMIs and eventually less burden of loan repayment.
Discounted Stamp Duty
A wife as a co-applicant can get you a significant discount on stamp duty. The Government of India and several State Governments offer affordable stamp duty rates for women to promote them as a homeowner.
List of Stamp Duty Rates Across States (Men and Women)
|Delhi||6 per cent||4 per cent|
|Jharkhand||7 per cent||Only 1 INR|
|Haryana||6 per cent in Rural and 8 per cent in Urban||4 per cent in Rural and 6 per cent in Urban|
|Rajasthan||5 per cent||4 per cent|
|Punjab||6 per cent||4 per cent|
|Maharashtra||6 per cent||6 per cent|
|Tamil Nadu||7 per cent||7 per cent|
|Uttar Pradesh||7 per cent||Rebate of INR 10,000 on overall joint home loan charges|
|West Bengal||5 per cent in Rural and 6 per cent in Urban with 1 per cent additional on properties worth more than 40 lakhs INR||5 per cent in Rural and 6 per cent in Urban with an extra 1 per cent on properties worth more than 40 lakhs INR|
|Karnataka||5.6 per cent||5.6 per cent|
(*Rates are subject to State and Union Government discretion and therefore can change from time to time.)
Joint home loans are available with several tax benefits such as;
- You and your spouse can claim a tax deduction of up to 1.5 lakhs INR on the principal loan amount under 80C of the Income Tax Act.
- You can be eligible for tax deductions up to 2 lakhs INR on the interest payment under Section 24 of the Income Tax Act.
- You and your spouse can claim tax benefits individually. It means the couple can avail benefits up to 4 lakhs under Section 24 and 3 lakhs INR under Section 80C of the Income Tax Act in total.
*Tax benefits under Section 80C are available only for the completed home or apartment. Keep this under consideration while applying for the tax benefits and joint home loans.
Succession might be time-consuming and problematic in case of the demise of the home loan applicant.
The EMI payments will be an issue and extra financial burden with loss of income. In addition, there might be a tussle on the property rights after completion of the loan tenure. A joint home loan will solve the problem.
Life is uncertain and full of unpleasant surprises. You should take a joint home loan, where the spouse will automatically get the succession rights and becomes the rightful owner of the property. If the partner is earning enough, monthly instalments will not be an issue.
Safeguards in case of demise or divorce
- Insurance is an apt safeguard option to protect against the financial burden on one partner in case of the demise of a spouse or even divorce. Take life insurance and include home loan liability in the insurance cover and enjoy your abode hassle-free.
- You can also go with a pre-nuptial agreement to ensure home loan repayment in case of separation or divorce. Fix the liability and get it notarized.
A joint home loan is a great option for faster, affordable, and high loan amount approval with flexible repayment options. Browse, compare home loans on a comparison website, and enter your dream home with your spouse today.