The joint home loan advantage

By BankBazaar.com | May 16, 2012

The most significant advantage of a joint home loan is the increase in home loan eligibility. Incomes from all joint home applicants are pooled in to enable the applicants to obtain a higher loan amount towards purchasing their dream home.  All the joint home applicants are eligible for tax rebates under Section 80 C for principal repaid and under Section 24 for interest repaid. However, these tax deductions are capped at 1 L for the principal repaid and 1.5 L for the interest repaid.

There are a number of advantages when you combine incomes and apply for a joint home loan. A bunch of these advantages are detailed here for your reference.

a. The most significant advantage of a joint home loan is the increase in home loan eligibility. Incomes from all joint home applicants are pooled in to enable the applicants to obtain a higher loan amount towards purchasing their dream home.

b. All the joint home applicants are eligible for tax rebates under Section 80 C for principal repaid and under Section 24 for interest repaid. However, these tax deductions are capped at 1 L for the principal repaid and 1.5 L for the interest repaid.

c. Another advantage of jointly taking a home loan is that all the borrowers can simultaneously avail these income tax rebates, thus maximizing the tax benefits of the home loan.

d. The number of people who can avail a joint home loan can be anywhere between 4 and 6, depending on their individual credit profiles.

e. The one criteria banks insist on is that all co-owners of the property should also be co-applicants but the reverse need not be true.

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.

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18 thoughts on “The joint home loan advantage

  1. Abitha

    Hi Mike…thanks for the comment, our design and product team are responsible for our blog layout, you could try some of the content management systems available on the web for some ready made layouts, which you might like to explore.

    Reply
  2. Ashish B

    I am not sure about the e clause i.e. The one criteria banks insist on is that all co-owners of the property should also be co-applicants but the reverse need not be true.
    Is it should be other way round? As me & spouce wants to apply for the home loan as co-applicant, but since my father is also investing some money, cann't he also become a co-owener without applying for loan?

    Reply
    1. admin

      Hi,

      The clause is true. Banks expect all co-owners of the property to be co-applicants. This protects the bank's interests in future if the onus of repaying the money owed to the bank falls on one of the co-owners who is not a co-applicant.

      Reply
  3. Luna Lovegood

    I find the exceptions outrageous. Sisters cannot take loans out together, but brothers can?! Where do we live, the dark ages! I thought there was a federal law prohibiting discrimination. I don't like the other exceptions either, but I never did like it "our way or the highway."

    Reply
    1. viji

      simple laws were made in the dark ages where paternal system was considered the norm. Also it is common to see Females moving into the husbands house more often rather than the other way around.. so if Brothers invest in common property live togethor , and their spouses move in there is not much confusion . But when sisters marry either they should find husbands agreeing to share a common roof !!! So I guess banks dont want this kind of confusion…..

      Reply
  4. Sonjoy Biswas

    I would like to know in case of one home loan whether both the borrowers can enjoy Rs One lac each (80c) and Rs 1.5 Lac each (sec 24) or not ?

    Reply
    1. Kumar

      Even I hav the same doubt as Sonjoy. Can both the co-applicants avail the income tax excemption of 1 Lakh and (80c) and 1.5Lakh (sec 24) each or is it capped at 1 and 1.5 lakh all put together irrespective of number of co-applicants. Could some one please clarify.

      Reply
      1. bankbazaar

        Sonjoy and Kumar, Thanks for stopping by. Yes in a joint home loan each of you is individually eligible for 1L under Section 80 C for principal and 1.5L under Section 24 for interest. Hope this clarifies the query.

        Reply
    1. Dattatri

      No. Only co-Owners can avail tax benefits and not just co-borrowers.

      Reply
  5. Harsh Monga

    Hi,
    Is it not necessary for both the co-applicants & co-owners to pay the EMIs also jointly, in case both want the tax benefits? Normally by default spouses are made co-applicants and co-owners, but only one applicant-cum-owner pays all the EMIs. In that case, can both still avail the tax benefits, even if the EMIS are paid by one person only?

    Reply
  6. JPTiwary

    I have taken loan from two agencies for two different houses. Interest component from one is Rs. 1.2 lac and from other one is 1.1 lac. Can I add both and avail rebate of Rs. 1.5 lac interest (Sec. 24)

    Reply
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  8. D.M

    When both husband and wife show home loan for Income tax rebate. Say interest paid is 1.5 lakh and principal paid is 1 lakh. Can both show the full amount or they need to divide the same among themselves? I mean both get double benefit of showing the interest and principal amount twice in each individual returns.

    Reply
    1. vijay

      both would be eligible for 50% even though premium is paid by single person. The whole amount can be shown by one person only if appropriate IT proof is submitted stating that the other person is not claiming for the same home loan

      Reply
  9. Ramesh

    Hi,
    I have taken a property soley registered in the name of my wife. Both of us are earning. We have taken a loan where i am the primary applicant and she is the co-applicant. Bank will issue certificate on both the name. ECS is done from my account. Now my concern is :-

    1. Am i eligible for tax benefit?

    2. Is my wife eligible for tax benefit ?

    3. If i am not eligible for tax benefit then what is the solution?

    4. If my wife is not eligible then what is the solution ?

    Please suggest. Your suggestion will be of great help. Thanks for your help.

    Regards,
    Ramesh

    Reply
  10. Mausam

    HI, We are three brothers, two in bangalore and 1 in Hyderabad. We plan to buy a plot n construct a house in bangalore. Do u think, we are eligible for a joint loan? Which all banks provide such joint loans?

    Reply

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