Why Joint Home Loans Are Great For Your Wallet
Apart from assisting you financially, one of the most attractive benefits of taking a home loan are the tax breaks. You can apply for a home loan either as an individual or with a co-applicant/co-applicants. And believe me, joint home loans are even more lucrative. Let us see how:
Who can be a co-applicant?
A co-applicant is a person who applies along with the borrower for a loan. In case you are applying for a home loan, you can take your spouse, parents or brother (related by blood) as co-applicants. Friends, sisters, minors or unmarried partners living together are usually not considered for a home loan. A maximum of 6 co-applicants are allowed for a single loan transaction.
Tax benefits
Overall, there are two types of benefits available on a housing loan. The first is on the interest paid, which is eligible for deduction up to Rs. 2 lakh on the income of that applicant under Section 24 of the Income Tax Act. The second is the repayment of principal amount. The cap in this regard is Rs. 1.5 lakh and comes under Section 80 C of the Income Tax Act.
In case of joint home loans, each joint home loan holder gets tax benefit of Rs. 2 lakh on the interest and Rs. 1.5 lakh on the principal amount separately. However, such tax breaks are calculated on the proportion of loan taken by people involved in it. For instance, if the ratio of ownership is 60: 40, then the loan of Rs. 50 Lakh will be divided as Rs. 30 lakh and Rs. 20 lakh respectively. The interest/principal applicable to the respective amounts will be taken into consideration for each individual.
Increased loan amount eligibility
Banks or home finance institutions consider the combined incomes of all the applicants seeking a single home loan. This helps you in increasing the size of the loan amount, thus easing your financial burden to a great extent. Additionally, with an increased sanctioned home loan amount, you get better home choices, too.
Reduced registration fee
In many states a lower property registration fee is levied if you have a women as an owner or a co-owner. Therefore, if you have your wife/mother or sister as a co-applicant in your loan application as well, you not only save on the taxes but also get a decent discount on the property registration fee.
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