Say you want to apply for a home loan, but your credit score is not particularly impressive. Or maybe you are not in the position to be able to pay off the loan by yourself. If you were to approach the lender alone, they are most likely to turn down your application. But what if you could apply jointly with someone whose credit score and repayment capacity compensate for yours? That can significantly improve your home loan eligibility. The lender now feels confident in your ability to repay the loan, together with the co-applicant.
Another reason why people opt for a joint home loan is that the tenure of a home loan is longer than other loans. It may take over a decade to pay off a home loan. You might be sure of your financial situation when you apply for the loan, but a couple of years down the line, maybe things start going sideways. Getting someone else onboard can be reassuring both for you and the lender.
Additional Read: What are Joint Home Loans? Eligibility and Documents Required for It
If you are also looking to apply for a joint loan, let us debunk some of the common myths around it.
Myth #1 – The co-applicant’s name is a formality
Fact – The co-applicant and the primary borrower bear an equal burden. They are both equally responsible for the repayment of the loan. When you sign on as someone’s co-applicant, make sure you ask questions and read the fine print to fully understand the legal and financial obligations you are about to take on.
Myth #2 – Only the primary borrower receives tax benefits
Fact – As the co-applicant, you are entitled to the same tax benefits as the primary borrower, but only if you are also the co-owner of the property. Merely being a co-applicant doesn’t make you eligible for tax deductions.
Additional Read: Tax Benefits on Home Loans for Joint Owners
Myth #3 – If you apply jointly, you are guaranteed to get your home loan sanctioned
Fact – There is no guarantee that your lender will sanction your loan only because you are applying jointly. A co-applicant with a bad credit score is not going to do your loan application any good. For instance, if you are applying for a joint home loan with your wife, her creditworthiness needs to contribute to yours or compensate for yours to meet the joint home loan eligibility criteria.
Myth #4 – The co-applicant has no role to play at the time of loan closure
Fact – Your relationship with the co-applicant might be amicable when you apply for a home loan together. But maybe that changes over the course of time. Even if the co-applicant is not the co-owner, the lender needs a NOC from him/her before they release the original documents of the property. The primary borrower may find it extremely difficult to obtain the documents without said NOC.
Myth #5 – Home Loan Protection Plan (HLPP) coverage extends only to the primary borrower
Fact – In the case of joint home loans, Home Loan Insurance or HLPP is not restricted only to the primary borrower. The insurance coverage applies to all the co-applicants as well.
Home loans are a long-term commitment. Whether you are applying individually or jointly, you need a reliable lender. Tata Capital has years of experience in the industry and offers attractive home loan interest rates and minimal documentation. Visit our website for more details.