BUYING a home is indeed a dream come true. And with a home loan, this dream is not beyond the reach of individuals today.
However, depending on your income and credit rating, you will be eligible for a certain maximum loan amount from the bank. What if your dream home demands a slightly higher loan amount than what you are eligible for?
Worry not -- you could take a joint home loan!
Apart from increased tax benefits, you stand to get a higher loan amount too (provided the co-borrower has a regular source of income).
wealth gives you the 'know all' on joint home loans.
Who can take a joint loan?
-- A married couple or a parent and child can take a joint loan.
-- Some banks allow brothers to take a joint home loan provided they will both be co-owners of the property. Banks insist that all co-owners of the home must be co-borrowers in a joint home loan.
Exceptions: Sisters, friends or unmarried couples living together are, generally, not allowed such loans by banks.
Do both borrowers get tax benefits?
Yes. You as well as the co-borrower can avail tax rebates on the principal and interest repaid on the loan.
This way you can maximize your tax benefits.
Example: Let's assume that the principal and interest repayment on your home loan for a given year is Rs 2.4 lakh and Rs 3.5 lakh respectively. Now, under Section 80C, you can get a maximum tax deduction of Rs 1 lakh on principal repaid and under Section 24 you can get a tax break of up to Rs 1.5 lakh on interest repaid. However, if you and your spouse had taken the home loan jointly, you would collectively be able to claim a deduction of Rs 2 lakh and Rs 3 lakh on the principal and interest repaid.
Note: The tax benefits are according to the proportion of the loan. That is, if the ratio of the loan is 70:30, then a loan of say, Rs 50 lakh will be split as Rs 35 lakh and Rs 15 lakh respectively and this ratio will be applicable while calculating tax benefits on interest/principal repaid on this loan.
Smart tip: For tax purposes, it is best to procure a home sharing agreement, detailing the ownership proportion in a stamp paper, as legal proof for ownership.
What documents does the bank need?
You as well as the co-borrower need to submit individual proofs for the set of documents required, as both of you are applying for the loan.
The list of documents differ from bank to bank. Following is the exhaustive list of documents. Check with your bank or NBFC which of these you need to submit for the loan processing.
Read: How the bank calculates loan eligibility?
Photograph: Tim Boyle/Getty
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