Co-applicant versus co-owner
It is important to understand the difference between a co-applicant and a co-owner.
- A co-applicant is someone who applies for a loan jointly with the primary borrower and shares the responsibility of loan repayment but may or may not have ownership in the property or asset.
- On the other hand, a co-owner is someone who has a legal share in the ownership of the property but may not necessarily be involved in the loan repayment unless they are also a co-applicant.
Key Benefits Of Taking A Joint Home Loan
Higher Loan Amount:
Including a co-applicant enhances your overall repayment capacity, making you eligible for a higher loan amount.
Tax Benefits:
Both co-applicants can individually claim tax deductions on principal and interest payments under Sections 80C and 24(b) of the Income Tax Act.
Shared Financial Burden:
The EMI gets divided between the applicants, reducing the repayment pressure on a single person.
Better Loan Approval Chances:
A joint application, especially with someone having a stable income and good credit score, can improve the chances of loan approval.
Documents Required for Joint Home Loan
- KYC Documents
- Identity Proof
- Address proof
- Income proof – Bank statements/Salary Slips
- Proof of co-ownership of the property
- Property documents
- Both the applicants are liable to submit the required documents.
Joint Home Loan Eligibility
- Joint home loan eligibility depends on the relationship between co-applicants.
- Any two or more individuals can apply jointly to purchase a home.
- Valid co-applicants include spouse, siblings, or parents.
- A maximum of six people can apply together under one home loan application.
- Most lenders (banks, NBFCs, HFCs) require co-applicants to also be co-owners of the property.
- Ensure the co-ownership clause is included in the property agreement to qualify for a joint home loan.
Who can be a Co-borrower or Co-applicant?
An immediate family member can be your co-applicant or co-borrower. He/she should be salaried or self-employed. NRIs are also eligible to be co-applicants. Below can be your co-borrower:
- Spouse
- Parent
- Sibling
Note: A brother can act as a co-applicant for a Home Loan if he is staying with the main applicant and intends to do so in the new property. However, a brother, acting as the main applicant, cannot choose his sister as a co-applicant. Furthermore, a female applicant cannot choose her sister as a co-applicant.
Myth vs Fact Format
Myth 1: Only married couples can apply for a joint home loan.
Fact: Not true. Siblings, parents, children can be co-applicants, subject to lender policies.
Myth 2: Both co-applicants must be co-owners of the property.
Fact: Yes, for claiming tax benefits, co-applicants must also be co-owners. But technically, a person can be just a co-applicant without ownership.
Myth 3: Adding a co-applicant guarantees loan approval.
Fact: While it improves your chances, approval still depends on income stability, credit score, and repayment capacity of both applicants.
Myth 4: Only one person can claim tax benefits on a joint loan.
Fact: All co-applicants who are co-owners and contribute to EMI payments can individually claim tax benefits.
Myth 5: A joint home loan means equal EMI contribution.
Fact: EMI sharing can be in any ratio, as mutually decided, and does not need to be 50:50.