The Multiple Benefits of a Joint Home Loan Explained

Taking joint Home Loan has several advantages. You not only get to share the repayment obligations with the co-borrower (generally, spouse or any other immediate family member), you can also save more on your taxes. Plus, there are other benefits as well. 

In this article, we will explore the many benefits of a joint home loan and the conditions you must adhere to. Let’s dive in!

Joint Home Loan Benefits 

1. Increased Loan Eligibility 

When you apply for a joint home loan with a co-applicant, such as your spouse or family member, the bank considers both incomes while assessing repayment capacity. Your collective income will be considered when determining your loan amount. 

Imagine you and your spouse are working professionals earning ₹50,000 per month. If you were to apply for an individual home loan, your eligibility might be limited based on your individual income. However, by applying jointly, your combined income of ₹1 lakh per month increases your loan eligibility significantly. 

This boosts your chances of buying a bigger or better home and allows you to purchase a property in your preferred location without compromising quality or size. 

2. Higher Tax Benefits 

Each co-borrower can claim tax benefits under Section 80C and 24 (b). Same applies if you’re eligible to claim Section 80EEA – as in both the applicants can avail tax deduction under this section. As per the Income Tax Act, principal repayments and home loan interest payments are eligible for tax deductions. 

• Principal Repayments

  As a joint home loan co-applicant, you can individually claim deductions on principal repayments under Section 80C of the Income Tax Act up to a maximum limit of ₹1.50 lakh. This means that each co-applicant can enjoy tax benefits based on their contribution towards the loan repayment. 

   

• Home Loan Interest Payments

  For self-occupied properties, the interest paid on a joint home loan is eligible for tax deduction under Section 24, up to ₹2 lakh per year. However, if the property is let out, there is no maximum limit for interest deduction. 

• Let's say you and your sibling jointly own a property and have taken out a home loan. If you both contribute towards the EMI payment, each co-applicant can claim tax benefits on the interest paid individually, allowing you to maximise your tax savings. 

3. Ease of Repayment 

If you and the co-applicant have a stable source of income, you two can share monthly loan repayment obligations or EMI. This would ease the repayment burden. Additionally, if financially feasible, you can increase your EMI. This would help you lower your interest payments and pay off your loan faster.

Factors to Consider Before Taking a Joint Home Loan

• Only immediate family members (spouse, children, parents and siblings) are allowed to apply as a co-applicant for a joint home loan.
• Your and the co-applicant’s credit score will be considered to determine loan eligibility. If your score is low, but the co-applicant has an excellent CIBIL score, say above 750, bank may consider the latter’s credit score while determining loan eligibility.
• In some cases, Non-resident Indians can also be co-applicants.
• The retirement age of the older applicant is generally considered while determining the tenure of the loan. 
• Both the applicants should have a stable source of income.