A joint home loan can increase borrowing eligibility and split the burden of a large EMI. But choosing one simply because it offers access to a bigger loan could be a mistake.
“The smartest home loan isn't always the one with the lowest interest rate. It's the one that's structured correctly,” said Ankit Bagadia, Director-Business at BankBazaar.com, on NDTV Profit's Your Money Matters.
According to Bagadia, couples should decide the ownership structure, EMI contribution and repayment plan before signing up. There is no ideal 50:50 formula—the right split depends on who funds the down payment, owns the property and actually services the loan.
If One Person Stops Paying, The Other Owes Full EMI
The biggest surprise may come when one borrower stops contributing because of a career break, job loss, higher studies or a move into entrepreneurship. For the bank, the couple's private arrangement does not matter. Both co-borrowers remain responsible for the loan.
“The liability from the bank's point of view is jointly owned by the couple,” Bagadia said. If one borrower stops paying, the repayment obligation falls on the other. Each borrower can effectively be held responsible for the full outstanding loan — not merely their agreed share of the EMI. That makes long-term planning crucial, particularly for loans running 20 to 25 years.
ALSO READ: What Happens To A Joint Home Loan If One Borrower Dies?
50:50 Split May Not Deliver The Best Outcome
Tax benefits are another reason to avoid blindly splitting a home loan equally. If one spouse is in the 30% tax bracket while the other has no taxable income, the immediate benefit may be more useful to the higher-earning spouse.
But today's income should not be the only consideration. A spouse on a career break could return to work later and begin contributing to the EMI. Bagadia said the ownership and repayment structure should reflect the couple's long-term income journey, rather than only their current salaries.
Want To Exit A Joint Loan? You Can't Just Walk Away
Removing a co-borrower is also not automatic. The bank must approve the change after conducting a fresh credit assessment of the remaining borrower.
Even then, leaving the loan does not mean giving up ownership of the property. Loan liability and property ownership are separate issues, and changing ownership may require a registered sale or transfer deed.
ALSO READ: Here's How To Split A Home Loan With Your Spouse For Maximum Tax Saving
Essential Business Intelligence, Sharp Market Insights, Practical Personal Finance Advice, Daily Fuel, Gold and Silver Prices and Latest Stories — On NDTV Profit.