Buying a house is one of the biggest financial decisions most people make. To share the cost, many couples choose to apply for a home loan together. When both spouses earn, applying for a home loan together can increase their loan eligibility and make EMI payments easier to share. In some cases, joint ownership can also help couples claim tax deductions separately and save on stamp duty.
But a joint home loan is not just about sharing the financial burden. Both borrowers are responsible for repaying the loan and missed payments can affect the credit scores of both applicants. Before applying, couples should understand how the loan works, what tax benefits they can claim and what financial responsibilities come with it.
How A Joint Home Loan Can Increase Loan Eligibility
Also Read | Layoffs Are Rising In Tech, But These Skills Are Helping People Unlock Better Pay
One of the main benefits of a joint home loan is that lenders consider the incomes of both applicants while assessing eligibility. This can help a couple qualify for a larger loan and potentially buy a home that may be difficult to afford on a single income.
For example, a couple applying together may have a higher combined income than either spouse individually. This can improve their chances of securing the required loan amount, while sharing the EMI can make monthly repayments easier to manage.
A larger eligible loan does not necessarily mean that a couple should borrow the maximum amount available. Couples should therefore assess their monthly expenses, savings and other financial commitments before deciding how much to borrow.
Can Couples Claim Separate Tax Benefits?
A joint home loan can offer tax benefits to both spouses, provided they meet the required conditions. Co-applicants can claim deductions on principal repayment and interest payments separately, depending on how much each person actually contributes towards repayment.
The tax benefits depend on which tax regime a couple chooses. Under the old tax regime, eligible borrowers can claim deductions on home loan interest for a self-occupied property. This deduction is not available under the new tax regime. Couples should compare their tax liability under both regimes before deciding whether a joint home loan will help them save money.
Stamp Duty Savings Depend On The State
Another possible benefit is a reduction in stamp duty. Some states offer lower rates to women buying property, which can help couples save money when registering a home. However, the concessions and rules for joint property registration vary by state. Couples should check the applicable rates and eligibility conditions on their state's registration portal before the deal.
What Are The Risks Of A Joint Home Loan?
The biggest risk is that both borrowers share responsibility for repayment. If an EMI is missed, the credit records of both applicants can be affected. Lenders also assess the credit history of both applicants. A low credit score or weak repayment history on either side may affect the loan approval process or the terms offered by the lender.
Couples should check both credit scores before applying and agree on how the EMIs will be divided. Keeping repayment contributions clearly documented can also help when claiming tax deductions.
Another point to consider is property ownership. Couples should decide their ownership shares and record them properly. If the relationship later breaks down, separating the property and loan obligations can become complicated.
What Should Couples Check Before Applying?
A joint home loan may work well for couples who both earn and plan to share the cost of buying a house. But the benefits depend on their income, tax situation and ability to repay the loan.
Before applying, couples should agree on the share of property each person will own, decide which bank accounts will be used to pay the EMIs and compare the tax liability.
A joint home loan can make buying a house easier for couples, but both partners must share the responsibility of repaying it. Couples should consider both the benefits and risks before deciding to take a home loan together.
Also Read | Is Buying A Rs 80 Lakh House On A Rs 1.35 Lakh Salary A Good Financial Decision?
Essential Business Intelligence, Sharp Market Insights, Practical Personal Finance Advice, Daily Fuel, Gold and Silver Prices and Latest Stories — On NDTV Profit.
