Purchasing your dream home is a huge financial investment. If you are funding the expenses with a loan, you can consider taking a joint home loan for couples to improve your repayment capacity.
Let us look at the pros and cons of joint loans.
Pros of joint housing loans
#1 Rebate on interest rates and easy repayment
Most lenders offer lowered interest rates for women co-borrowers. Besides, in a joint loan, you can easily share the repayment burden with your co-applicant. So, your EMI obligations weigh less on your individual incomes.
But that’s not all! With two people repaying the loan, you can pay higher EMIs and close the loan over a shorter tenure.
#2 Higher loan amount
Taking a joint loan also means fulfilling home loan eligibility terms for a bulkier loan amount. How? In a joint loan application, you and your spouse pool your incomes together, increasing your EMI affordability and making you eligible for an extended tenure and higher budget.
With a higher loan amount, you can buy a house aligning with your housing desires.
#3 Tax benefits
The best thing about a married couples joint home loan is that you receive tax benefits for both the principal amount and the interest paid. Why, yes! Thanks to Sections 24 and Section 80C of the Income Tax Act. And since two borrowers share the loan, you get double benefits and double savings.
But how much can you save? Section 80C enables you to claim a tax deduction of Rs. 1.5 lakhs in a financial year. Moreover, Section 24 allows you to claim an additional rebate of Rs. 2 lakhs on the interest paid.
So as a couple co-owning the property and co-borrowing the loan, you can claim Rs. 4 lakhs under Section 24 and Rs. 3 lakhs under section 80C. That’s a whopping total of Rs. 7 lakhs!
Additional Read: How to Claim Tax Benefits on Joint Home Loans?
Cons of joint housing loans
Now that you know the advantages of joint home loans, let us look at their disadvantages.
#1 Transfer of burden
If one of the co-borrowers loses their job or faces a financial emergency, the repayment burden automatically falls upon the other partner. This can put an intense financial strain which may lead to EMI defaults. Not repaying your EMIs on time will also hurt your credit score.
#2 Death of spouse
If unfortunately, one of the spouses passes away, the burden of clearing the housing loan again falls entirely on the surviving partner.
If a couple decides to part ways in the future or a co-borrower opts out of repaying the loan, the responsibility to pay the loan rests with one applicant. Inability to repay can lead to legal repercussions for both borrowers.
To avoid this, you can sign an agreement mentioning each partner’s share in loan liability beforehand.
Additional Read: Do’s and Don’ts for Married Couples When Buying a New House
Joint housing loans are pretty attractive, considering the host of benefits they offer. Whether you are applying jointly or individually, get hassle-free housing finance with Tata Capital. Get extended loan tenures and the most competitive home loan interest rates, starting at 6.90%.
Evaluate your loan eligibility and apply today!