Joint Home Loan: Buying a property is one of the greatest and most significant accomplishments in a person’s life, and it requires a substantial financial investment. Numerous individuals are opting for home loans in order to purchase a new home or their first residential property. The repayment period for home loans is typically between 20 and 30 years and involves a substantial sum. Therefore, meticulous planning is required prior to obtaining a home loan.
Home loans taken out by a solitary family member could be a burden, so having a co-borrower is advantageous. Families with two or more income-earning members can readily choose a joint mortgage because it reduces the burden on a single borrower and increases the loan amount. However, it also has a number of benefits and hazards.
Prior to finalising a loan offer, the applicants must evaluate the advantages and disadvantages of a joint mortgage.
Advantages of a Joint Home Loan
Increased loan amount: Adding a co-borrower to a loan application increases the borrower’s eligibility to borrow more money from the bank, assuming that both borrowers easily satisfy the minimum requirements.
Possessing a co-borrower with a high credit score also increases the likelihood that the mortgage loan application will be approved.
With a joint mortgage, each co-borrower becomes eligible for the available tax deductions, including the mortgage interest deduction. Under Sections 24 and 80C of the 1961 Income Tax Act.
Reduced Interest Rate: Including your wife or mother as a co-applicant can result in a reduction in interest rates. This is because the majority of institutions offer female customers lower interest rates.
Risks of Joint Mortgage
A high credit score can be advantageous when applying for a joint loan, but it can also increase the likelihood that the application will be denied. This occurs when one or more of the co-borrowers has a lower credit score or a poor loan/EMI repayment history.
When one of the borrowers experiences a financial crisis or significant loss, the other borrower automatically becomes responsible for repaying the entire loan amount. This increases the financial strain on one particular borrower.
In the event of future disputes between the co-borrowers, it becomes difficult to transfer the property acquired through the joint loan.
Is it a poor idea to obtain a joint mortgage?
Prior to applying for a joint mortgage, there are several important factors to consider. However, it can be advantageous if the co-borrowers comprehend all the terms and remain in agreement throughout the repayment period.