Why joint home loans may be the right option for homebuyers

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Purchasing a house is one of life's most important money moves — and for some, taking out a joint home loan can be made easier and more rewarding. If you're taking an application with your brother/sister, parent, or spouse, joint loans merge both applicants' credit histories, bringing a variety of advantages single applicants might not be able to reap.

Here's how joint home loans are becoming an intelligent option for Indian homebuyers today:

1. Higher loan eligibility

The biggest benefit of a joint home loan is the increased loan eligibility. Since the two applicants are applying jointly, the lender is considering the joint income while determining the repayment capacity. This tends to enable the borrowers to obtain a higher loan amount — which means being able to acquire a larger or better-positioned house.

This proves very useful in large cities where the prices of property are high, and a single income may not be sufficient to satisfy the lender's requirements.

2. Tax relief for both the applicants

Both co-applicants on a co-owned home loan can claim tax deductions under Sections 80C and 24(b) of the Income Tax Act — if they are co-owners of the property too. Both lenders may avail themselves:

• Up to ₹1.5 lakh per year for repayment of principal under Section 80C

• Up to ₹2 lakh per year for repayment of interest under Section 24(b)

This increases the tax-saving value by more than double that of a single borrower, and the finances become more manageable for the family.

3. Common burden of repayment

With a co-borrower loan, the burden of repayment is divided, decreasing the load on one individual. The co-applicants are able to pay for EMIs based on their financial capacity, and it becomes easier to bear monthly expenditures without impacting repayment of the loan.

This shared burden also enhances the culture of repayment because default by either side can hurt both credit ratings.

4. Lower rates for female co-applicants to a small extent

When the woman is one of the co-borrowers and is also a co-owner of the property, some banks provide slightly lower interest rates — around 0.05% lower than usual interest rates. This is one way to encourage women homeownership and financial inclusion.

With a female as the primary applicant, it can then keep the cost of borrowing low for the duration of the loan.

5. Legal ownership and ease of inheritance

When property is bought in common — i.e., by spouses or close relatives — the ownership and rights are finalized from the outset. This can prevent future conflict over inheritance and facilitates transfer of ownership on death or divorce.

But it must be done in a way that the two individuals have well understood their obligations and rights, and the property documents depict the owner's percentage.

What to remember

While there are advantages in co-housing loans, they also depend on co-honesty and co-trust. Default by either should be punishable, and co-applicants will fight in the future. Awareness of EMI contribution, proportionate property ownership, and selection of exit if one wants to withdraw is important.

For families, siblings, or couples planning to purchase a property together, a joint home loan can free up more finance, twin tax benefits, and ease the journey towards homeownership. Carefully thought out, open model of obligation makes it a financially prudent step for homebuyers today.