All you wanted to know about joint home loans

Buying a home is indeed a dream come true. And with a home loan, this dream is not beyond the reach of individuals today. However, depending on your income and credit rating, you will be eligible for a certain maximum loan amount from the bank. What if your dream home demands a slightly higher loan amount than what you are eligible for?

Worry not — you could take a joint home loan!

Apart from increased tax benefits, you stand to get a higher loan amount too (provided the co-borrower has a regular source of income).

Here is your dose of  ‘know all’ on joint home loans.

Who can take a joint loan?
— A married couple or a parent and child can take a joint loan.

— Some banks allow brothers to take a joint home loan provided they will both be co-owners of the property. Banks insist that all co-owners of the home must be co-borrowers in a joint home loan.

Exceptions: Sisters, friends or unmarried couples living together are, generally, not allowed such loans by banks.

Do both borrowers get tax benefits?
Yes. You as well as the co-borrower can avail tax rebates on the principal and interest repaid on the loan.

This way you can maximize your tax benefits.

Example: Let’s assume that the principal and interestrepayment on your home loan for a given year is Rs 2.4 lakh and Rs 3.5 lakh respectively. Now, under Section 80C, you can get a maximum tax deduction of Rs 1 lakh on principal repaid and under Section 24 you can get a tax break of up to Rs 1.5 lakh on interest repaid. However, if you and your spouse had taken the home loan jointly, you would collectively be able to claim a deduction of Rs 2 lakh and Rs 3 lakh on the principal and interest repaid.

Note: The tax benefits are according to the proportion of the loan. That is, if the ratio of the loan is 70:30, then a loan of say, Rs 50 lakh will be split as Rs 35 lakh and Rs 15 lakh respectively and this ratio will be applicable while calculating tax benefits on interest/principal repaid on this loan.

Smart tip: For tax purposes, it is best to procure a home sharing agreement, detailing the ownership proportion in a stamp paper, as legal proof for ownership.

What documents does the bank need?
You as well as the co-borrower need to submit individual proofs for the set of documents required, as both of you are applying for the loan.

The list of documents differ from bank to bank. Following is the exhaustive list of documents. Check with your bank or NBFC which of these you need to submit for the loan processing.

Here is a standard list of options for each document required.

1. Identity proof:
— Driving license
— Voters ID
— Passport
— PAN card
— Ration card
— Employee ID
— Bank passbook
— Letter from a recognised public authority or public servant verifying your photograph
— Confirmation letter from your employer or another bank verifying your photograph

2. Address proof:
— Driving license
— Voters ID
— Passport
— Ration card
— Bank passbook or Bank account statement
— LIC policy/ receipt
— Utility Bill – telephone, electricity, water, gas (less than 2 months old)
— Letter from any recognized public authority verifying residence address of the customer
— Letter from your employer

3. Age proof:
— Driving license
— Passport
— Bank passbook
— PAN Card
— Birth certificate
— 10th standard mark sheet

4. Income proof:
The following set of documents that detail your credit profile varies according to whether you are a salaried individual or a self-employed individual.

a. Self Employed/Entrepreneurs
— A brief introduction of Business/Profession
— Balance Sheet, profit and loss account statement of income, proof of income tax returns
for the last 3 years certified by a CA
— Photographs
— Receipts of advance tax payments if any made
— A photocopy of Registration Certificate of establishment under Shops and Establishments Act/Factories Act
— Registration Certificate for deduction of Profession Tax
— Certificate of Practice
— Receipts of Bank loans
— Proof of investments (FD Certificates, Shares, any other fixed asset)

b. Salaried individuals
— Income Proof ( you just need to provide one of the options listed for income proof):
Latest Pay slip
Form 16
Increment/Promotion letters
Appointment letter
Pay slip (Last 2 months) with salary account bank statement
Certified letter from Employer
IT returns ( for three years )
— Investment proof (FD certificates, shares, any fixed asset etc.)
— Documents supporting the financial background of the borrower (his liability and assets if
any)
— Photographs

5. Property documents

If a flat is purchased from the builder, you need the following supporting documents to submit to the bank:
— Original copy of your agreement with the builder
— 7/12 extract – This is issued by the concerned land authorities giving details such as the survey numbers, area, date from which current owner is registered as owner etc.
— Property register card, which is obtained from the City Survey Department
— N.A. permission for the land from the collector, if its agricultural – If the land is agricultural and is being utilised for residential/ commercial/industrial use, then such agricultural land has to be converted to non-agricultural land and a Non-Agriculture Order has to be obtained from the Collector of the district where the property is located.
— Search Report and Title Certificate – A search report and title certificate can be obtained from an advocate who will conduct a survey of the title of the property by visiting the office of registrar. A legal opinion can avoid any legal hassles later and is mandatory to be filed with the agreement for sale.
— Development agreement between the owner of land and the builder
— Copy of order under the Urban land Ceiling Act
— Copy of building plans sanctioned by the competent authority
— Commencement certificate granted by the Corporation
— Building completion certificate
— Latest receipts for taxes paid towards the land or property or flat to be purchased
— Partnership deed or memorandum of association of the builders firm

In case you are buying from a Cooperative Society, then ensure you have the following documents in place:
— Original share certificate of the Society
— Allotment letter from the Society in your name
— Copy of the lease deed, if executed
— Certificate of the registration of the society
— Copy of the byelaw’s of the Society
— No objection certificate from the Society
— 7/12 extract or property register card in the Society’s name
— Copy of N.A permission for the land from the collector
— Search Report and Title Certificate
— Copy of order under the Urban Land Ceiling Act
— Copy of the building plans sanctioned by a competent authority
— Commencement certificate granted by Corporation
— The latest receipts of taxes paid for the property
— Original Agreement to assign / Deed of assignment

If you are constructing on your own land then you will need the following documents:
— Original sale deed of land and extract of Index II
— 7/12 extract or property register card in your name
— Copy of N.A. permission for land from the collector
— Search and title report
— Copy of tax paid under Urban Land Ceiling Act ( obtained from Commissionerate of Urban
Land Ceiling and Urban Land Tax )
— Copy of the building plans sanctioned by a competent authority
— Building permission granted by the Corporation
— The latest receipts of taxes paid for your land
— Estimate of the cost of construction certified by the architect