What are the Benefits of a Joint Home Loan?

Updated on November 26, 20187 mins read
Benefits of a Joint Home Loan

We all aspire to buy a house of our own at some point in life. But what if your dream home is of a greater value than you can afford? This is where you may want to consider taking a joint home loan. A joint home loan is taken by 2 or more people by clubbing their incomes to raise a loan of higher value. It will not only help you take a loan of a higher value, but will also give you tax benefits too. Let’s look at each aspect of joint home loans in detail:

What are the benefits of taking a joint home loan?

1. Higher Loan Amount: 

Benefits of a Joint Home LoanIf a single income is not sufficient to cover the loan amount, then you can bring in a co-applicant to get a higher loan amount. Many couples opt for joint home loans to raise a loan of higher value. 2. Tax Benefits: Benefits of a Joint Home LoanJoint home loans are beneficial from a tax point of view too. Co-owners of property, who apply as co-borrowers can avail tax benefits under Section 24 and Section 80 of the Income Tax Act. For detailed information see; Home Loan: Tax Benefits

Who can be a co-borrower?

Benefits of a Joint Home Loan

A co-borrower is a person with whom you take the home loan. Each co-borrower is equally responsible to repay the loan amount. Joint home loans can be taken by as many as 6 co-borrowers.

  1. Married couples: One can be a co-borrower with their spouse. For the lender, this is an ideal situation. In this case, both need not be co-owners of the property. However, co-ownership is always advised.
  2. Father and son: When the father has only one heir, either of them can be the main owner of property. But if the father has more than one heir, then the lending institution would ensure that the son is the primary owner, to avoid any disputes after the demise of the father.
  3. Father and unmarried daughter:  In this case, lending institutions would ensure that the daughter is the primary owner of property before granting loan. This is done to avoid any disputes after her marriage.
  4. Mother and unmarried daughter: This case is similar to that of father and unmarried daughter.
  5. Brothers: They can be co-applicants in a loan provided the property is co-owned by them, they are currently living together, or are expected to live together in the new property.

Friends, sisters, cousins, brother – sister and unmarried partners are generally not given joint home loans. When the spouses apply as joint applicants, the maximum term of home loan can be 20 years, depending on the retirement age of the older applicant. When co-applicants are parents or brothers, the maximum tenure is restricted to 10 years. Also, if parents’ income is considered for repayment, loan tenure is restricted by their retirement age. Know more about your joint home loan eligibility from our home loan advisor at +91-8108899980 or sign up here and we will call you

What if there is a dispute between co-borrowers?

Benefits of a Joint Home LoanTo avoid any disputes in future, ask the lender to state in the loan itself that each co-borrowers’ liability shall not exceed a given per cent of the principal amount. If the lender disagrees to such a clause, then you can draw up an agreement with all your co-borrowers on splitting the liability. Put down all the terms on a stamp paper and sign it.

 

 

 

How to repay a joint home loan?

A joint home loan can be repaid like a regular home loan. EMI payments can be made through a single/ joint account. A few consider giving proportionate cheques for each EMI, but this can’t be done as banks’ internal systems don’t accept 2 cheques for same EMI. You can divide the repayments with the help of postdated cheques. As far as the bank is concerned, it doesn’t matter who contributes how much in repayment, as long as EMIs are paid timely. If there is a default in payment, it will proceed with the standard loan recovery process against all co-borrowers. Thus, before taking a joint loan, it is very important to understand what your rights and responsibilities are.

Here are a few points you must consider before taking a joint home loan :

  • Before you sign as a co-applicant, make sure you get a right to the property. If you are going to repay the loan, you might as well benefit from the property.
  • A couple taking joint loan should ideally take separate term life covers to reduce financial burden on the other in case of one’s demise.
  • The repayment record of a joint home loan reflects in the credit score of all co-borrowers. Default in payment by any partner can impact your eligibility for a loan in the future.

Get answers to the following questions before taking a joint home loan;

  • Who is responsible for making payments?
  • Who owns the property?
  • How can I get out of the loan?
  • What if I want to sell my share?
  • What happens to the property if one of us dies?

Since the lender gave loan based on a joint application, if the primary borrower defaults, files for insolvency or passes away, it becomes the co-applicant’s responsibility to repay the loan. So, you must make sure that your co-borrower is trustworthy and has the financial ability to pay off his share.

What documents are needed to apply for joint home loan?

Since most banks have a different requirement of documents to sanction a joint home loan, it is difficult give a complete list. A few documents you will need to provide are:

  • Address proof
  • ID proof (PAN, passport, electricity bill)
  • income proof (form 16)
  • bank statements of both the applicants
  • proof of co-ownership of the property
  • Income tax returns
  • Occupation certificate from builder
  • Share certificate from builder/society

Here are a few FAQs asked by our customers, which may help you get a better understanding:

1Should the co-owners be co-applicants?

Yes. Home loan companies insist that all co-owners be co-applicants. But the reverse is not true. All co-applicants need not necessarily be co-owners.

2If the apartment is in my wife’s name, can I take the loan?

Yes, but you and your wife will have to be co-applicants for the loan. However, if you are neither the owner nor the co-owner of property, you will not be eligible for any tax benefits on loan repayments.

3If my wife and I have bought a home, can we register it in either of our names or should it be registered on both our names?

If the property is jointly owned, it is advisable that it be registered in both your names.

4My wife and I own a house with equal ownership. But I am repaying the entire loan, so can I avail full tax benefit?

Yes. You can avail full tax benefit on the interest component of your loan.

5My wife and I own a house with ownership being 50:50. Right now I am repaying the entire loan. After a year, she will start working. Can we split the loan repayment and tax benefits then?

Yes you can. However, frequent change regarding loan repayment and tax consideration is not is not advisable as they may appear artificial or look like a way of tax avoidance.

6If my spouse and I have not specified the percentage ownership, is it automatically taken as 50:50?

Yes, as that is the easiest assumption to make. This can be rebutted by entering into a written agreement about percentage of ownership.

7. Can one spouse claim the interest benefit and the other the principal repayment benefit?

No. Each tax benefit has to be shared in proportion to each one’s share in the loan.

8. How can my wife and I show IT department the way we have made our payments? Will the bank give us a certificate stating how much each has paid?

To show share in loan payments, you can enter into a formalized agreement with your wife stating shares of loan. This can be done on stamp paper. The bank will give you a certificate, of which you can make 2 copies and submit it in your individual IT returns along with the agreement.

9. If a home loan has been taken by a father and the loan has been sanctioned on the basis of his son’s salary can he claim tax rebate on interest payments? 

According to Income Tax Act, the person who has taken the loan can claim tax rebates. So, the son can avail tax benefits only if he is a co-owner of the property.

10. If a property is owned by a woman who has no income, can her husband claim IT benefits as a co-applicant?

No, IT benefits can be availed only by property owners. A home loan is one of the biggest liabilities one takes in a lifetime. Make sure you consider all the benefits and risks before taking a joint home loan with a trustworthy co-borrower. Meanwhile, if you already have a home loan, use the calculator below to see how much you can save by switching to a lower interest rate. Have any more queries? Feel free to ask us in the comments section below.


Tarini

Tarini

Tarini comes with a degree in Mass Communication and Media studies. She joined SwitchME as a content writer and moved on to being an assistant product manager. Tarini is an experienced Content Strategist with a background in Product development and management. She is skilled in SEO, social media strategy and online content marketing and likes to travel when possible
146 COMMENTS

Have a question? Post it here and we will get back to you within 1 working day.

  1. Rakesh Sharma
    Nov 26 2016 at 10:56 am
    Reply

    Hi,

    I am salaried person with paying income tax with 0 properties on hand.

    Now by brother wants to buy a property and wants to add me as co-borrower to get large amount of loan ( he is able to pay the EMI, but he dont have the eligibility). So How i can share my name as co -borrower to get benefit from income tax.

    Now Suppose I want to buy my own property to get fully tax benefit, what will happen, on which property do i will get tax benefit? can you provide input on this.

    • Sumita Nath
      Sumita Nath
      Dec 01 2016 at 5:37 pm

      Hi,

      Yes Rakesh, to get the income tax benefit you can share your name as co-borrower. The tax deduction or tax benefit towards interest paid on home loan depends upon whether the residential property is a self-occupied property or a let-out property. With respect to Self-occupied property, the deduction towards interest on housing loan is restricted to Rs.2 lakh per financial year. If the property is actually let out, then you would be taxed on the rental amount received.

  2. Premkumar
    Aug 22 2016 at 9:49 am
    Reply

    We are seven family members and have five cents.we are planning to purchase one cent and construct residential apartments apartment
    with three floors.All are in govt services.Two were pensioners.Pl inform land+construction composite loan from banks and details.

    • Sumita Nath
      Sumita Nath
      Sep 28 2016 at 2:42 pm

      Hi Prem Kumar,

      Could you please help us to understand your query in a better way?

  3. Shreyaz Gadre
    Jun 04 2016 at 8:04 pm
    Reply

    Hi this is Shreyas Gadre
    I have purchased flat in the name of me, my wife and my wife’s maushi’s name. Since wife’s maushi has contributed for taking flatbwe have included her name in the registered agreement.
    I will be taking home loan for which i am perfectly eligible through LICHFL. Now LICHFL has taken objection on my home loan application stating that how can be maushi contributed for d flat. What is the way out. Mh wifes maushi does not have any legal heirs in future she will be staying with us.

    • Tarini
      Tarini
      Jun 06 2016 at 4:59 pm

      Hey Shreyaz

      Several banks have reservations about lending to a certain mix of co-borrowers like father- daughter, brothers etc. I would suggest that you approach another bank like ICICI, DHFL, SBI and explain your situation to them. I believe you will get through with a little persuasion 🙂

  4. Vignesh
    Feb 22 2016 at 7:41 am
    Reply

    Hi Tarini,

    I have a home loan for sole owned property. Recently, i got married. Now my query is can I add my wife(House Wife) as Co-Borrower of loan and is that possible only i avail all tax benefits.

    Thank you.
    Vignesh

    • Tarini
      Tarini
      Feb 22 2016 at 3:48 pm

      Hey Vignesh

      To add a co- borrower you will have to go through the following steps:
      1. Take an NOC from the bank for adding another co-borrower.
      2. Once they agree, you can go ahead and add her, for doing so, you will have to pay the processing fees again as the bank will have to verify all her KYC documents, income related documents etc.
      3. Once she has been added as a co-borrower, you will have to specify on stamp paper that you will be claiming 100% tax benefits on the home loan, or you will need to take an NOC from your wife, allowing you to claim full tax benefits.
      I hope this is helpful 🙂

  5. Ashish
    Dec 26 2015 at 9:55 pm
    Reply

    Hi Tarini,

    I have registered property on my wife name as owner and me as co-owner. My wife is not working and I will be the one who will be paying 100% loan amount. In loan also my wife is applicant and I am co applicant. Now, question is, can I take 100% tax benefit (want only my name on interest certificate which will be getting from SBI to attach to ITR). Is there any process needs to be followed for the same ?

    Thanks!

    • Tarini
      Tarini
      Dec 28 2015 at 1:01 pm

      Hey Ashish

      There is no special procedure for the same, you can simply attach the certificate provided by the bank. It will have only your name on it as you will be repaying the entire home loan. You can claim 100% tax benefits for your EMI payments up to 1.5 lakhs for principal payments under section 80C and up to 2 lakhs under section 24 for interest payments in any financial year.

  6. Ganesh
    Dec 22 2015 at 6:16 am
    Reply

    we have taken Joint loan between me and my brother. Last year I showed 50:50 loan for tax benefit, but this year I am planning to avail 100% tax benefit for this and from next year again 50:50 and my brother will not claim for the same.

    • Tarini
      Tarini
      Dec 23 2015 at 2:51 pm

      Hey Ganesh

      Yes, you can go ahead and do that, it will not have any negative implications in any way 🙂

  7. Moorthy
    Dec 15 2015 at 9:15 pm
    Reply

    Hi Tarini,
    Me and My brother-in-law are planning to construct a home in the land owned by my Brother-in-law.
    Should i be registered as a co-owner of the land to avail the loan? What are my options for availing home loan?

    Thanks in advance,
    Moorthy

    • Tarini
      Tarini
      Dec 17 2015 at 3:34 pm

      Hey Moorthy

      Yes, if you are planning to take a home loan for the construction of property then its best if you get yourself registered as a co-owner of the property. By doing so you will be able to claim IT deductions on the EMIs or part of EMIs paid by you. Further, by being a co-owner of the property, it’ll be easier for you to get added as a co- borrower of the home loan. I hope this helps 🙂

  8. deepti dsouza
    Dec 14 2015 at 7:38 pm
    Reply

    hi
    just recently v bought a flat. my husbands cibil not being good a loan wasnt possible on his name.
    my father in law sold his property and gave my husband his share. the above amount is a loan taken on my name only. me being the primary and my father in law the co borrower. the registration papers too carry mine and my father in laws name. the loan emi goes directly from my account.
    now the problem is that we have had major family issues and my husband wants his name to be added in the registration. also in that case i do not want the loan on my head.. is it possible to get the hdfc loan transfered to his name and also get his name on the registration deed? if so, what is the process? will v have to pay stamp duty again? kindly help

    • Tarini
      Tarini
      Jan 08 2016 at 3:22 pm

      Hey Deepti

      First, you will have to take permission from HDFC bank to add your husband as a co -borrower and co -owner of the property. If they agree, then you can add him by executing a git deed in his name.
      However, since you will be adding a new co- borrower, HDFC may ask you to pay a processing fees again as they will have to verify all his KYC documents before accepting him as a co -borrower.
      There is no need to pay the stamp duty again. I hope this helps 🙂

  9. NIRMALA PANDIT
    Nov 25 2015 at 10:07 pm
    Reply

    I have availed home loan from lic for purchase of a flat with my husband as co-applicant. The EMI is being paid by me only. now owing to dispute I have stopped payment of EMI. What the LIC will do?Please advice how to get of my husband name .Can i transfer my home to other

    • Tarini
      Tarini
      Dec 09 2015 at 2:57 pm

      Hey Nirmala

      This is a very complicated situation, I would suggest that you seek help from a professional finance expert and also contact a lawyer regarding the same. We will not be able to help you out in this regard as we have no additional knowledge related to your case or current situation. We wish you the very best through these difficult times.

  10. HDFC Loan
    Oct 26 2015 at 6:32 pm
    Reply

    Hello Tarini,

    My sister and her husband co own a flat and have loan in both their names. There is no percentage defined in terms of loan and ownership of the flat. Her husband has stopped paying the EMI since 6 months due to domestic issues and a divorce case is ongoing. The HDFC bank has now sent a recovery notice to my sister and asked her to pay the whole pending amount else they will auction the flat. My question is if they auction the flat, will my sister get the 50% of the auction amount after the recovery of the remaining loan amount. Is there any possibility that if we repay the remaining amount of loan, the bank can transfer the property to my sister’s name.
    Thanks in advance for your help

    • Tarini
      Tarini
      Oct 30 2015 at 2:19 pm

      Hey Kushal

      This is a very complicated case and its best that you get legal advice from a lawyer on this matter, along with consulting HDFC bank on their procedure, rule related to auctioning and recovery of loan amount. Based on my understanding, since both your sister and husband did not specify their percentage of ownership, it is automatically taken as 50:50. So if the property is auctioned off, then both co-owners should get 50% of the auction amount after recovery of loan amount. I hope this helps.

    • Hdfc loan
      Oct 31 2015 at 12:45 am

      Thanks for your reply. We spoke to Hdfc and the are willing to stopnthe auction if we pay the outstnding.

    • Tarini
      Tarini
      Nov 02 2015 at 12:06 pm

      We’re happy to help, I hope you find an amicable way out 🙂

  11. Gerald Victor
    Oct 13 2015 at 2:51 pm
    Reply

    Hi Tarini,

    1.My wife is a home maker. Can I include her as a Joint Home loan applicant if we can’t show any source of income in her name ? Will the banks approve this ?
    2.Can she be the Primary loan applicant, in order for us to avail the ROI at 0.05% lower than General public ?
    3.By including my spouse to be a joint (Primary) co-owner in the property and home loan, will I still be able to make maximum utilization of Home loan benefits under IT 80C and Section 24 or will I miss out anything major (being a co-loan applicant) as I am on 30% tax bracket and trying to minimize Income Tax.
    4.Will the property need to be registered in her name alone or can be done in both our name ? Any changes in the registration of the property and stamp duty payment if the Home loan is a Joint loan ?
    5.Assume, I pay the EMIs for the loan and the property is Let out for Rent. The rent gets credited in my wife’s name in her Individual bank account and I do not share any portion of it, will I still need to show the rent earned under ‘Other sources of income ‘ column when I file Income Tax ?

    Thanks a lot for your replies and guidance.

    • Tarini
      Tarini
      Oct 14 2015 at 2:46 pm

      Hey Gerald

      Here’s a clarification to all your queries:
      1. Technically you should be able to add her as a joint home loan applicant. However, this depends on the bank’s internal policies, please check with them. They will be bale to guide you bets in this regard.
      2. Yes, she can be the primary loan co-applicant (if the bank allows you to make her a co-applicant)
      3. Since you will be paying the full EMI, the interest certificate provided by bank will bear your name on it. By attaching that with yoru IT returns, you will be able to claim full tax benefits 🙂
      4. To avail the reduced interest rate for women, your wife will need to the the primary owner of property, you can be the second co-owner. There will be no changes in the registration and stamp duty charges, these charges are independent of the nature of home loan.
      5. Since the will get credited to her account, there is no need for you to show the rent under other sources of income.
      I hope this helps 🙂

    • Gerald Victor
      Oct 14 2015 at 4:56 pm

      Hello Tarini, thank you very much for your prompt reply and clarifications. This really helps 🙂

    • Tarini
      Tarini
      Oct 14 2015 at 7:07 pm

      Hey Gerald, we’re happy to help 🙂

  12. ASIS
    Oct 07 2015 at 7:15 am
    Reply

    can a married daughter apply for a loan with her father as co-borrower of 67 years of age and she has not include her name as co-owner of the property?

    • Tarini
      Tarini
      Oct 07 2015 at 12:39 pm

      Hey Asis

      Rules regarding the relationships of co-borrowers are not hard and fast, this depends on the lending policies of the bank/ NBFC you approach. However, you have higher chances of getting a home loan as co- borrowers if you too are listed as a co-owner of the property. I hope this helps.

  13. Gopal
    Sep 19 2015 at 9:07 pm
    Reply

    Hi Tarani
    I and my wife were joint borrowers of housing loan from LICHFL. But I am sole owner of the property. Emi being detected from both of our salary account.
    Please clarify whether both of us can avail the tax rebate towards the principle and interest paid.

    • Tarini
      Tarini
      Sep 22 2015 at 5:31 pm

      Hey Gopal

      Only you will be able to claim IT benefits on the EMI paid, as your wife isn’t a co- owner of the property. I hope this helps 🙂

  14. Abhishek
    Sep 01 2015 at 1:14 pm
    Reply

    Hi Tarini

    My question is regarding self occupied property and max deduction of Rs. 2,00,000

    In case I shifted to my home on 1-Aug-2015 (vacant for 1st 4 months in current FY & I was staying on rent for this period), will I be eligible for Rs. 2,00,000 deduction or Rs. 2,00,000 * 8/12

    Please advise.

    Regards

    Abhishek

    • Tarini
      Tarini
      Oct 08 2015 at 3:14 pm

      Hey Abhishek

      You will still be eligible for tax deductions up to Rs.2,00,000.

  15. Nitin Malik
    Aug 26 2015 at 6:30 pm
    Reply

    Hi,
    Actually my father took a house loan from SBI in 2010 and he expired in 2014. Now the property is transferred on my mother , brother and my name. After my father i have taken the liability to repay this home loan and i am paying EMI. Bank just gave me the liability of the home loan but didn’t transfer home loan on my name. How can i get IT benefits as i am paying EMI now?

    • Tarini
      Tarini
      Aug 27 2015 at 12:20 pm

      Hey Nitin

      I am sorry for your loss. At present you will not be bale to claim IT benefits on the loan as the loan amount hasn’t been transferred to you yet. To get it transferred, you will need to file an application in your loan branch along with your father’s death certificate and an NOC from your mother and brother stating that they have no objection to the loan amount being transferred in your name. Do check with the bank if they need any more documents. I hope this helps.

    • Nitin Malik
      Aug 27 2015 at 12:34 pm

      Hi Tarini,
      Thanks a lot for your reply. I have talked to bank so many times to transfer loan amount to my name but they replied that it’s not possible to do it. I can only take liability of the loan and they can issue a certificate showing that Being legal heirs I am paying EMI for my father loan after his death. They are saying this certificate should work. What do you think about this?

    • Tarini
      Tarini
      Aug 27 2015 at 2:40 pm

      Hey Nitin

      That’s strange, I’ll try to check in with a few SBI officials and get back to you on that. Meanwhile. The certificate issued by bank should be sufficient in helping you claim IT deductions.