Joint debt is not uncommon in today’s times.
But, one must take into account a few factors before opting for it.
WITH home loans becoming dearer, a joint home loan is a viable option that is being exercised by many to purchase a property.
Those eligible to avail this facility include a married couple and a parent and child.
Some banks may allow brothers too, provided they are both co- owners of the property.
However, friends and couples in live- in relationships may not be eligible for joint home loans. The documents needed for joint home loans are the same as any other home loan, the only difference being that
the documents are needed from both applicant and coapplicant.
General home loan documents needed are identity proof, address proof, salary slips and bank statements.
Benefits: Eligibility for a higher loan Two income sources are better than one. Also, it gives you the opportunity to avail a higher loan amount for a bigger home in a city. Banks take into account the income of the applicant and co- applicant to determine the eligibility of loan. This can enable you to buy the bigger house you wanted rather than settle for a smaller house that was possible in the loan amount of a single income source.
Tax exemptions Borrowers are subject to tax rebate under Section 80 C for principal repaid and Section 24 for interest repaid. So, joint home loan can take the advantage of maximum tax relief as all the borrowers can avail the tax rebates simultaneously.
They can enjoy the tax benefits available for a home loan and individually claim deduction. This brings down the family's total tax liability. However, co- ownership is mandatory to avail of tax benefits. Talk of friendship with benefits
Pifalls Rift in relationships If there’s trouble in paradise, it could adversely affect the partners financial understanding.
For example, a divorce between a husband and wife who are owners of a property can reflect negatively on the home loan front too. If the property is registered in the name of your spouse, then you may have to continue paying EMIs even if you would never get possession of the house. If one of the applicants files for insolvency or passes away, it becomes the co- borrower's responsibility to repay the entire loan.
Defaulters As the home loan is repaid over a long period of time, if either of the partners falls on hard days in future, it can get messy.
The repayment ability of the joint home loan affects one’s CIBIL score. Even if a coapplicant or partner in the joint home loan is not regular in repaying the loan, then his CIBIL score may suffer and affect his chances of qualifying for loans in future.
Points to ponder So, while joint home loans offer benefits, a few precautionary measures would go a long way in protecting oneself against its pitfalls.
. Go for a joint home when you are absolutely confident about the responsibilities
shared between both the applicants.
. It is advisable that before signing on as a co- applicant, one ensures the ownership right to property.
. The couple should also take separate term plans to reduce the financial burden on one spouse in case of the other's demise.
. Try and draw up and sign an agreement with your spouse on splitting the liability, so that a future clash between the co- borrowers can be avoided.
TWO- GETHER: A joint home loan can ensure a high loan amount and help in tax rebates
Source : Midday