Ayushi and Raj, a couple married for two years, have spent most of their marriage renting in Delhi. Now, with dreams of a future together in the heart of the city, they’re ready to buy their first home. After much thought, they decided on Noida—an up-and-coming area with competitive rates when compared to Delhi. While renting has given them flexibility, the idea of investing in their own home felt like the right step. The couple chose a joint home loan, encouraged by advice from family and friends who highlighted its numerous benefits for newlyweds. But what exactly makes a joint home loan advantageous?
What Is A Joint Home Loan?
A joint home loan is a loan shared between two co-applicants, often spouses, who agree to jointly shoulder the financial commitment of buying a property. Co-borrowers can claim tax benefits and ease the loan repayment process. While both applicants share responsibility, it’s essential that they meet certain eligibility criteria and maintain open communication on financial commitments.
Chartered Accountant Abhay Asknani emphasises the flexibility and advantages a joint loan provides: ’For young couples like Ayushi and Raj, a joint home loan is not just about sharing the financial load but also a way to increase loan eligibility, get attractive rates, and optimise tax benefits. It’s a win-win arrangement that many new homeowners should consider.’
Benefits Of A Joint Home Loan For Newlyweds
1. Higher Loan Eligibility
Joint applications increase overall loan eligibility, as lenders consider the combined income of both partners. ’The biggest advantage here is that with two incomes, the couple can apply for a larger loan amount. This makes it easier for them to look at properties that would have otherwise been out of reach,’ Abhay explains.
2. Tax Savings
With joint loans, couples can enjoy considerable tax savings. Section 80C of the Income Tax Act allows each borrower to claim a deduction of up to ₹1.5 lakh on the principal repayment, while Section 24 provides up to ₹2 lakh on interest repayment. Together, a couple can save up to ₹3 lakh under Section 80C and ₹4 lakh under Section 24, a significant reduction in the effective cost of the loan.
3. Reduced Interest Rates For Women
Lenders often extend preferential interest rates to women borrowers to encourage female property ownership. Women co-owners and applicants can benefit from lower interest rates by a few basic points, reducing the EMI burden. As Abhay notes, ’Having a woman co-applicant on the loan adds an edge in terms of reduced interest and stamp duty, which is a key reason couples today are opting for joint ownership.’
4. Reduced Stamp Duty
States like Uttar Pradesh, Haryana, and Delhi offer reduced stamp duty rates for women property owners to empower them and encourage investment. If Ayushi were the primary owner, they’d save on stamp duty, making their dream home even more affordable.
5. Ease Of Repayment
Joint loans allow couples to split EMIs, making monthly repayments easier to manage. This means Ayushi and Raj can pay off the loan faster by opting for higher EMIs, which will help reduce the interest component over time. The burden is lessened with each spouse contributing, making the financial commitment more manageable.
6. Smoother Property Succession
Joint ownership facilitates smoother property succession in cases of unforeseen events. As both Ayushi and Raj would be co-owners, the property could easily be transferred to the surviving spouse.
Key Considerations Before Taking A Joint Loan
While the benefits are attractive, a joint home loan requires some important considerations:
• Credit scores of both applicants: Lenders will evaluate both credit scores. A lower score could impact the loan terms, so it’s crucial both spouses have strong credit histories.
• Long-term financial plans: A home loan is a lengthy commitment. Couples should discuss future plans, including potential career moves or family expansions, to ensure they’re prepared for long-term financial stability.
• Liability in case of non-payment: Each applicant is equally responsible for the loan. In case of financial challenges, the burden could fall entirely on one partner.
• Legal implications and exit strategy: Equal ownership comes with legal ramifications. It’s advisable to consult a legal advisor to understand rights and responsibilities in cases like separation.
Who Can Be A Co-applicant?
While most co-applicants are spouses, siblings or close relatives can also apply together, though they may not qualify for all the benefits available to married couples.
As Abhay puts it, ’Homeownership is more than just a financial decision; it’s an emotional investment. With joint loans, couples are finding a way to fulfil their dreams while enjoying financial benefits and added security.’
