A home loan can help you achieve your dream of building or owning your own house. However, paying the loan back on time may not be possible if you’re the only borrower. Thankfully, there’s a solution to this—the joint home loan.

When you take a joint home loan, you share the responsibility of paying back the debt with the co-applicant of the loan. A joint loan has a number of benefits and implications, which we will explore in this article.

Understanding Basic Terminology

You need to first understand the distinction between the terms, ‘co-owner’ and ‘co-applicant’. The co-owner of a property is the other individual who has his or her name registered on the property documents. The co-applicant, on the other hand, is the person who’ll be sharing the obligation of paying back the loan.

Most lenders need the co-owner of the property and the co-applicant of the loan to be the same person; however, the co-applicant don’t necessarily have to be the co-owner. For instance, if you own a house with your spouse, then both of you are co-owners of the property and will have to be co-applicants on the loan.

However, suppose you own a house completely in your own name, you can apply for a joint home loan with your brother who has no ownership over the property. In this case, you brother becomes a co-applicant, but not the co-owner.

Bajaj Finserv offers some of the best home loan interest rates in the country. Apply online for a home loan today for attractive interest rates, starting from 9.75%.

Now that you’re clear on the terminology, let’s take a look at the details of a joint home loan arrangement:

What are the Advantages of a Joint Home Loan?

Improved Prospects: When you apply for a home loan, the bank takes your credit score into consideration; you only qualify for the loan if your score’s good enough. A higher credit score makes it easier for you to get a better deal on the interest rate of the loan, meaning that you pay less money over time.

It may be easier for you to get a joint home loan and also to negotiate a better interest rate while you’re at it. This is because the credit scores of both applicants are taken into consideration during the approval process.

If one of the applicants has a bad credit score, it’s usually not taken into account; that’s how you can benefit from a joint loan. Bajaj Finserv charges only a 0.8% processing fee for salaried individuals who apply online.

Better Loan Eligibility: Applying for a joint home loan makes you eligible for a higher loan amount because the incomes of both applicants are considered by the bank.

Since your capacity to repay the loan is higher with a co-applicant, the financial company will be okay with sanctioning a higher amount than they might have otherwise.

Tax Benefits: This is a huge plus-point of taking a joint home loan. If you take out a normal home loan, you’re eligible for tax deductions on both the principal amount and the interest that you’ll be paying back. A joint home loan entitles both signees, individually, to tax deductions on the principal and interest payments. This means nearly twice the savings.

Both applicants are entitled to a maximum tax deduction of INR 1.5 lakh on the principal payments, and up to a maximum of INR 2 lakh on the interest payments.

What is the Procedure?

Once you’ve decided to take a joint home loan, the next question you may be asking is, how to apply for joint home loan? Well, the procedure to apply for a joint home loan is the same as it is for a normal home loan, except that both applicants will have to submit all the documents required by the bank. Bajaj Finserv makes the process easier by letting you apply for the loan online.

Before you go in for a joint home loan, be sure of your co-borrower’s as well as your own financial situations. If one of you defaults, the task of paying the EMIs shifts to the other party. To avoid unnecessary delays in payment, always be transparent and upfront with your co-applicant.