It isn’t easy to find an individual who does not harvest the dream of having a shelter of their own. However, house purchase or construction is a significant investment, and your savings may often fall short of the price tag. Although a home loan makes house purchase easy, the EMIs may consume a substantial part of your income. Read on to find out the best ways to reduce your home loan EMI burden with a joint home loan and its additional benefits.
The Top-5 Benefits of a Joint Home Loan
You can apply for a joint home loan with a close relative, such as a spouse, daughter, son, or siblings. Additionally, the co-applicant needs to have a decent monthly income and credit score. The following are some of the benefits you can get with a joint home loan:
Discounted Interest Rate
When you apply for a home loan as the sole borrower, the lender calculates your eligibility and determines the loan amount. In contrast, when you apply for a joint home loan, the lender clubs the eligibility of both applicants and considers the merit of your loan application. Naturally, your loan eligibility increases, and you can expect to get the lowest home loan interest rate.
Higher Loan Amount
With a joint home loan, you can get up to 90% of the property’s market value as the loan. As the lender adds the income of both applicants, it automatically enhances your loan limit, and you can claim the highest amount. Hence, besides the lowest home loan interest rate, a joint home loan can also help you purchase or construct a bigger and better house.
Extra Tax Benefits
Both applicants in a joint home loan can claim tax deductions of up to INR 3.5 lakh every financial year. Under Section 80C, each applicant can get tax benefits of up to INR 1.5 lakh on the principal component, and Section 24 enables each applicant to claim tax deductions on the interest component. Hence, a joint home loan not only gives you a higher loan amount and lowest interest rate but also more significant savings in the form of tax deductions.
When you avail a home loan as the sole borrower, you have to repay the entire amount in your sole capacity. In contrast, a joint home loan divides the responsibility equally between the two applicants. Hence, the burden on your wallet is lesser in the case of a joint home loan. Moreover, you can conveniently increase the EMI amount and become debt-free faster.
Special Rates For Women Applicants
Some lenders offer exclusive interest rates that are lower than the lowest home loan interest rate to women borrowers. Hence, if you can include a woman in your loan application, you can expect to get a 0.50% to 1% reduction in the interest rate. However, not all lenders offer the same facility, and it is better to enquire about it in advance.
A joint home loan can help you save a massive amount over an extended loan term. Additionally, as the loan liability gets divided, you can enjoy financial freedom. Ensure that you select the best lender to get benefits over and above the lowest home loan interest rate.