What is the loan amount I am eligible for? Can more than two of us take a joint home loan? BankBazaar.com answers all your queries.
I along with five others plan to buy a plot of land and construct apartments for us. We are considering a joint loan. I would like to know if:
1. We can get a joint loan?
2. Will there be any legal problem in obtaining such a loan?
3. Will we all get tax benefits for the loan amount?
— Arnav
Yes, it is possible for a group of six people to take a joint loan. Banks allow anywhere between two and six persons to take a joint loan, depending on their respective credit profiles.
However, banks as a rule do not allow friends or even siblings to take a joint loan. A joint home loan can be taken by a married couple or a parent and child. In some instances, brothers are allowed to take a joint loan. Just in case the six of you include a father, mother and four brothers, you can be assured that a loan will be sanctioned by the bank you approach.
b. There is no legal problem with six people opting for a joint loan. However, banks insist that all co-owners of the home must be co-borrowers in a joint home loan, though the reverse is not stressed.
c. Section 80C and Section 24 grant income tax rebates to people with home loans. However these tax deductions are capped at Rs 1 lakh for the principal repaid and Rs 1.5 lakh for the interest repaid for each individual. Another added advantage of jointly taking a home loan is that all the borrowers can simultaneously avail these income tax rebates, thus maximising the tax benefits of the home loan.
I work as Manager of Sales with a Multi National Company. My monthly take home is approximately Rs 30,000 per month, which comes to Rs 6 lakh per annum including all benefits. I want to buy a property in Indrspuram (Delhi NCR), which costs Rs 32 lakh (Rs 30 lakh for home and Rs 2 lakh for registration). How much loan should I take from a bank?
— Pushpam Kumar
You are eligible for a maximum of Rs 13 lakh at 20 year loan tenure, which is the maximum tenure given by most banks. The loan amount is based on your income of Rs 6 lakh per annum. You need to have funds to make a down payment of Rs 19 lakh to purchase that property you have identified.
The Equated Monthly Installment will be approximately Rs 15,000 per month assuming an interest rate of 13 per cent that is prevalent in the market, today.
You can consider a joint home loan if you fall short of funds for the down payment. The advantage of applying for a joint home loan is you can combine your income and a family member’s income to be eligible for a higher loan amount.
Also remember, banks generally fund a maximum of 85 per cent of the cost of the property you plan to buy, hence it is essential to have at least 15 per cent of the cost of the property as down payment.