Advantages and disadvantages of taking joint home loan | Fusion - WeRIndia

You have known about certain things to do while opting for a joint home loan. In this article, you will learn about the advantages and disadvantages of taking a joint home loan.

Advantages of a joint home loan:

• You will get a higher loan amount if you opt for a joint home loan. This is because the income of co-applicants will also be added to your income and loan amount will be sanctioned accordingly.
• If you have a woman applicant like your mother or wife as a co-applicant, then you can have a concessional interest rate on your home loan. Some banks and financial institutions provide a lower interest rate to women.
• Both the applicants can avail tax benefits on a joint home loan if they are co-owners. You can claim ₹1.5 Lakh in the principal amount and up to ₹2 lakhs in the amount of interest paid on a home loan per annum for a tax deduction. The amount can drastically reduce your tax liability. If both co-owners repay the amount, then both can avail tax benefits up to a maximum of ₹1.5 lakh per year. In addition to that, there is no notional tax on the second house as per the latest budget provision unless it is rented out. That means you do not have to pay tax on your second home, except if you earn a rental income on it.
• Sharing the repayment of loan reduces your burden of liability. However, co-owners have to decide the repayment portion as per their convenience.

Disadvantages of taking a joint home loan:

• If the credit score of a co-applicant is not good, then it might impact your loan.
• Verification of documents takes more time as the lending institutions have to check both the applicants.
• Applicants will get a limited share of the property in the event of the death of either of the applicants if there is no will. This is due to the sharing of property among all legal heirs of the applicant. However, the repayment burden lies with the surviving applicant.
• If a loan is taken by husband and wife and later they divorced, then the repayment of the loan becomes a problem. The burden of repayment of loan lies with the primary applicant. If they refuse to repay, then all the applicants will be liable for legal action taken by lenders.

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