For many people, buying a house is one of the biggest financial decisions in life. With property prices rising across cities, a home loan becomes essential to make the purchase possible. However, loan eligibility is often limited by income and existing liabilities. Taking a joint home loan with a family member can help overcome this. It improves your borrowing capacity and brings many other practical benefits.
When two or more individuals apply jointly for a home loan, the lender considers their combined income, making it easier to meet home loan eligibility for a higher loan amount. This opens up better property options that may not have been possible with a single income. Co-applicants must provide identification and address proof, and only those whose income is being assessed need to submit income documents.
A co-applicant can be any immediate family member—typically a spouse, sibling, or parent. While co-owners of the property are usually co-applicants, all co-applicants don’t need to be co-owners. The key factor is whose income is being considered for the loan. This flexibility makes it easier to boost loan eligibility while keeping ownership arrangements as needed.
One of the most significant perks of a joint home loan is the dual tax advantage. If both co-applicants are also co-owners and contribute to repayment, each can separately claim a tax deduction available on a home loan. Under Section 80C, each can claim up to ₹1.5 lakh for principal repayment. Under Section 24, each can claim up to ₹2 lakh on interest for a self-occupied property. If the house is rented out, there’s no limit on the interest deduction.
Women co-owners enjoy extra incentives. Many banks offer a lower interest rate for female borrowers. To qualify, the woman must be listed as a co-owner of the property and also as a co-applicant for the loan. This helps reduce overall interest outgo and encourages more women to participate in property ownership.
Loan repayment becomes a shared commitment. Co-applicants can choose to pay EMIs from a joint account or make individual payments. Regardless of the payment method, both borrowers are equally responsible for full repayment. Therefore, maintaining a strong credit score is crucial for both, as any default affects all co-applicants involved.
When applying for a joint home loan, all applicants must be clear about their ownership share in the property. This is particularly important when co-applicants are not spouses. The ownership percentage must be clearly stated in the sale deed or agreement. This avoids confusion during resale or inheritance. Each owner’s share also decides the share of tax benefits and responsibility in case of dispute.
A joint loan can improve your eligibility, but it also affects all co-applicants’ credit scores. If the EMI is delayed or missed, the credit history of every co-applicant is impacted. This can reduce their future loan eligibility. Hence, it is important to repay the loan on time and maintain a shared financial understanding with co-applicants.
Some people prefer to repay the loan early to reduce the interest cost. Before doing so, check the lender’s policy on joint home loans. Some lenders may require all co-applicants to sign off on the prepayment. Others may allow only one borrower to initiate it. Understanding these rules in advance helps avoid delays later.
In case a co-applicant wants to exit the loan mid-way, or in the unfortunate event of their death, the remaining borrower(s) will be solely responsible for repayment. Some lenders may ask for a new co-applicant or guarantor to be added. Having a loan protection insurance plan can be helpful to cover such situations and ensure the burden does not fall on one person alone.
Some joint home loan borrowers may be eligible for subsidies under government schemes like PMAY. If a woman is the sole or joint owner of the house and it is the family’s first home, they may qualify for interest subsidies. It is important to check with your lender or financial advisor regarding eligibility at the time of application.
A joint home loan can help you buy a better home while sharing the repayment load. It improves your loan eligibility and increases the chances of getting tax benefits. However, it also involves shared responsibilities. Understanding the legal, financial, and practical aspects helps make an informed decision.