If you and your spouse are both working individuals, opting for a Joint Home Loans can be a very good option in order to purchase your own house. A joint home loan is a loan which is availed with a co-applicant to be eligible for higher loan amount and share the financial burden equally. Even if the wife is non-earning, banks are ready to provide a joint home loan in the name of both the partners. Joint Home Loans are quite popular and almost all the banks insist on Joint Home Loan even if the property has a single owner.
The benefits of taking a Joint Home loan with your spouse is as follows:
Discounted Interest Rates
Majority of banks offer a rebate on the interest rate of home loan for female borrowers. In order to avail this benefit, one has to choose his wife to be the primary applicant and nominate himself as the secondary applicant. This way you will be getting the the home loan at a lower interest rate.
Greater loan Amount
The loan amount approved for a joint home loan is generally greater compared to the loan amount which is approved for an individual. This is because the lender will not only consider your income but will also consider the income of your spouse. So a higher amount of money can
be borrowed as a couple.
Increased Chance of Getting the Loan Sanctioned:
Getting a joint home loan is more seamless than an individual loan as the collateral provided is mutually pledged by both the husband and wife.
Also, if you are not eligible to get a home loan, adding your spouse as a co-borrower to a home loan increases the chances of being eligible for the loan.
As per Section 26 of the Income Tax Act, in case of property jointly owned the joint owners shall be treated as owner of their share in the property and will be taxed separately for such share. Both the husband and wife can enjoy tax benefits on joint home loan from his/her taxable income
individually. They can claim a maximum of Rs. 2.0 Lacs on the interest paid and up to Rs. 1.5 Lacs on the principal amount under the Section 24 and Section 80 C of the Income Tax Act, respectively.
Low Risk of Defaulting on Loan Repayment:
With several expenses to account for in a household, repayment of loan as EMIs is the main challenge. A joint loan helps share the burden of the debt with your spouse. If at a later stage one of the borrower is unable to pay the EMI, then the co borrower can take over. This way the risk of defaulting on loan payment is lesser as there will always be the co-borrower who will share equal responsibility to pay the instalments or repay the loan.
Reduction in Stamp Duty
The Government of India offers a lower stamp duty rate for women property purchasers as an initiative to promote women empowerment. Many states have relaxed rates for women as compared to men. States such as Uttar Pradesh, Haryana, etc, have lower stamp duty rates for
Easier Succession Process
The process to transfer property to successors is a time intensive process. However, if you take a property jointly with your spouse, then on the demise of one of the spouses, by default, the survivor becomes the rightful owner of the property.
What if a dispute arises ?
The liability to repay the loan as per schedule is joint and several on the part of each co-borrower, which means each party would be liable for part of the repayment or up to as much as all of the repayments. So be aware of the technicalities of loan repayment in case a dispute arises.