Things To Know If You Are A Co-Signer For A Home Loan

Geeta Gupta, 35, decided to buy an apartment in Noida and approached a bank to apply for a home loan. However, she was told by the bank that with her current salary she was not eligible for the amount. Gupta had to make her husband a co-signer to be eligible for the home loan. Her example shows that applying for credit with a co-signer helps you secure home loans that you wouldn't be able to qualify for on your own.

PropGuide tells you about a co-signer and how having one may be useful.

When do you need a co-signer?

• If you don't meet the minimum income requirements for a loan.
• If you have no established credit.
• If you have bad credit.
• If your debt-to-income ratio is too high.
• You are self-employed.
• You changed jobs recently or your income is variable.

What about the co-signer?

By co-signing a mortgage, one becomes the guarantor to a loan. Before you decide to use a co-signer or co-sign for someone, you must consider that:

• As a co-signer, you do not have any ownership in the property. And, in case the primary borrower fails to repay the loan and you have to do it on his behalf, you will not be able to sell the property to fund the repayment.

• Any default on loan repayment by the primary lenders will have a bearing on the co-signer's credit history. If the primary borrower defaults on the debt, as the co-signer, you will also be obligated to pay the money back.

With inputs from Probalika Boruah