In one word, yes. However, to appreciate how a joint home loan is one of the best financial decisions one can take, you have first to understand what it is and how it works.
Purchasing a house is one of the most crucial financial decisions that an individual takes in his/her lifetime. Market research reveals that over 70% of home buyers end up purchasing a house that exceeds their initial budget by 20%. It’s a considerable sum, which often requires additional financial assistance over and above the existing home loan and creates a considerable economic burden.
This extra 20% might become a substantial burden on the home buyer if they do not have a sound plan to arrange for these funds. Enter joint home loans- the most convenient way to fund your home purchase.
What is a Joint Home Loan?
A joint home loan is when two or more members of the same family take the credit together with equal responsibility to pay it back. Financial institutions are more willing to extend these loans as there are two or more people involved, which makes it less risky.
The following people can be your co-borrower:
Most financial institutions allow up to 6 co-borrowers for a single joint home loan. Some of them insist that the property should be co-owned as well. You may check whether you are eligible for this loan using an online home loan eligibility calculator.
What Are The Benefits Of A Joint Housing Loan?
There are numerous benefits of a joint loan for home purchase over a standard home loan.
- Higher Loan Amounts
Most financial institutions offer a higher loan amount for joint housing loans. Lenders evaluate the repayment capability of all the applicants to determine the loan amount.
- Tax Benefits
You can also avail of tax benefits on a joint home loan. The tax benefits can be availed by each of the co-applicants provided that they have joint ownership of the property and are contributing to the repayment.
- Per Section 24 of the IT Act, each co-borrower can claim tax benefits of up to Rs. 2 Lakh on interest payments. Note that the maximum tax benefit cannot exceed Rs. 4 Lakh and cannot be more than the actual interest payable to the lender. This provision is especially useful in the initials days of repayment as that is mostly interest payment.
- The borrowers may also claim tax rebates of up to Rs. 3 Lakh cumulatively each year on the principal component of their EMIs under Section 80C of the IT Act. You may calculate your monthly EMI using an online home loan EMI calculator. Like the interest payment, this amount also cannot exceed the amount to be paid to the lender as principal.
- Special Rates For Women Applicants
Most financial organizations offer a lower rate of interest if the primary applicant is a woman. It is usually a few notches lower than the standard home loan interest rates. However, she must be the sole or at least a joint owner of the concerned property.
A joint home loan can substantially lower your burden of financing house purchase. These added benefits make it an even more attractive option for potential home buyers.