By Mr. Adhil Shetty, Bank Bazaar.com
Advertisements of beautiful villas with
luxurious amenities are splashed all over newspapers and Televisions You wish
to own one & the price also looks ideal. Next stop, you approach a bank or
a housing finance company (HFC) for home
loan. That is when you realise that, after paying the EMI ( (Equated Monthly Installments) for your latest car, you do not qualify for the entire loan amount
for this place.
Joint Home Loan..!
Do you have to let go of the house for
now & wait for your car loan to finish? No. You can instead opt for a joint
housing loan. Your spouse, parents, children and sometimes your siblings can
also act as co-borrowers to the loan.
Sametime, there are certain conditions to
be fulfilled for availing joint housing loans. All co-borrowers need not be
property owners, but all property owners have to be co-borrowers.
Husbands & wives can be co-borrowers
to claim income tax benefits. Unmarried couples, female relatives such as
sisters, and business partners do not qualify to become co-borrowers in most
cases.
A minimum of 2 (two) and maximum of 6 (Six) people can act
as co-borrowers for a single hosuinge loan.
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| Adhil Shetty CEO BankBazaar com |
Major advantages..!
Increased borrowing capacity..!
Banks / HFCs do not lend amounts where
EMIs sum up to more than 40 to 45% cent of take home salary. If you are already
paying an EMI for a vehicle or an existing house, then your eligibility comes
down to that extent.
If your spouse, parents or / children are
not servicing any loan or paying a small EMI, then your total incomes put
together will be taken into account while considering for a loan.
Suppose a house costs Rs. 1 Crore lakh
and eligible laon amout Rs. 75 lakh
& you are eligible only for Rs. 40 lakh according to your repayment
capacity. Your spouse could be eligible for the balance Rs. 35 lakh, according
to her income limit. This especially is useful when you think of going in for a
high value house.
Avail income tax benefits...!
Tax benefits are one of the biggest
advantages of availing a joint housing loan. Section 80C of the Indian Income
Tax Act allows for rebate of up to Rs. 1 lakh on principal repayment and Sec.
24 allows a rebate of Rs. 1.5 lakh on interest payment of housing of a
self-occupied property.
For example, the principal payment for
loan availed for a year is Rs. 2 lakh & interest payment Rs. 5 lakh. When a
single person takes the loan, the maximum he /she can claim is Rs. 1 lakh under
80C for principal repayment and Rs. 1.5 lakh for interest repayment.
However, when it is a joint home loan and
both spouses are equal owners, both co-borrowers i.e., husband & wife can
claim Rs. 1 lakh and Rs. 1.5 lakh respectively for principal and interest
repayment individually.
That would be quite a lot of saving on
the income tax front. However, keep in mind that repayment for the loan should
be done by both of you in proportion to your ownership ratio.
But as there are two sides to a coin,
this too does not come without disadvantages.
Loss of House Rent Allowance benefits..!
If
you are enjoying deductions that come together with owning a property, HRA
(House Rent Allowance ) benefits cannot be claimed. Only a person staying on a
rented property can claim HRA benefits. T
his is applicable if you are residing in
the same place as your owned property. However, if you reside at a different
place due to your employment, then you are eligible for both benefits.
Disputes at a later stage..!
If
there is a fall-out between the co-owners due to some reason, settling
repayment of the loan may be an issue. Also, if one of the co-borrowers quits
work due personal or domestic reasons, then the burden of repayment falls on
the other co-borrower.
Mr. Adhil Shetty is CEO at Bank Bazaar.com
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