A house loan is often a person’s greatest financial commitment, needing careful deliberation. You may like to purchase a house that is rather costly, and as a result, you may not be eligible for the loan amount you seek. In this case, a shared house loan might be beneficial. This is a Home Loan that is taken out by two or more people in order to buy a house. A combined home loan can be applied for by you and your spouse, parents, children, and certain siblings. Now that you know what a combined Home Loan is, let’s look at things you need to know about it.
A co-borrower is someone who joins you in taking out the Home Loan. You’ll sign the same papers as everyone else. It’s vital to distinguish this from a co-owner, who is someone with whom you share ownership of a property. Co-owners are usually required to be co-borrowers by lenders. On the other hand, this does not have to be the case. A co-borrower does not have to be a co-owner all of the time. To share the debt load with you, they don’t have to own the property. As you may know, a combined home loan is frequently taken out by couples or parents and children.
Term of the Loan
Combined Home Loans often have longer terms, especially if the co-borrowers are married. In most cases, the maximum loan term is 25 years. However, if the co-applicants are siblings or have a parent-child connection, the maximum duration may be limited to 10-15 years, depending on the parent’s age. This is because the loan repayment is based on the parent’s salary, and the maximum loan term is determined by the parent’s retirement age.
This implies that in a combined laon if one of the borrowers defaults on the loan, the remaining borrowers will be responsible for repayment.
Both applicants must provide the required Know Your Customer (KYC) papers when applying for a shared home loan. Address evidence, identification proof, proof of income, and bank records are all examples of this. As a result, two sets of KYC papers will be required here.
WHAT ARE THE ADVANTAGES OF GETTING A JOINT HOME LOAN?
Choosing a shared loan provides a number of advantages, some of which are listed below –
- Tax Benefits: Under a shared house loan, all co-borrowers can claim a tax deduction on a proportional basis under Section 24 of the Income Tax Act on interest repaid up to INR 2,00,000 and Section 80C on capital returned up to INR 1,50,000. Co-applicants can thus determine how much tax advantage they would want to get and, as a result, select what share of the loan each party would pay. While the tax benefits for both an individual and a combined house loan are the same, the benefits in absolute terms are greater with a commbined home loan.
- Eligibility for a larger loan: Having several applicants for a home loan boosts your chances of receiving a larger loan, allowing you to purchase a larger property. When determining repayment ability, lenders look at the overall income, and having a shared income boosts your chances of acquiring a bigger loan.
- Women Co-applicants Get Special Interest Rates: Many lenders in the market today provide women co-applicants a discounted home loan interest rate. This only applies if the woman is the property’s solo or joint owner and will be the principal or co-applicant for the house loan.
Choosing a combined home loan is advantageous for applicants because it not only allows them to purchase a larger or better home but also assures that the debt and overall obligation are shared, reducing the strain on a single individual. We recommend taking for a combined home loan if you want to buy your ideal home.