Buying a house is a dream for many, and taking a joint home loan with your spouse, sibling, or parent can make it easier. With shared eligibility, higher loan amounts, and tax benefits, joint loans seem like the perfect solution.
But beware—many borrowers make costly mistakes that lead to disputes, loan rejections, or financial strain. Let’s look at the top mistakes you must avoid when taking a joint home loan.
1. Not Checking All Co-Applicants’ Credit Scores
Lenders assess every applicant’s credit history. If one applicant has a poor score, it can reduce the chances of approval or increase the interest rate.
✅ Tip: Check and improve credit scores of all applicants before applying.
2. Unequal Contribution Without Clarity
Often, one co-applicant pays more EMIs while ownership shares are unclear. This creates legal disputes later.
✅ Tip: Clearly define ownership proportion in the property agreement.
3. Ignoring Tax Benefit Distribution
Joint home loans offer tax deductions under Section 80C (principal) and Section 24(b) (interest). But both applicants must be co-owners and co-borrowers to claim benefits.
✅ Tip: Split repayment proportionately to maximize tax benefits.
4. Adding a Co-Applicant Just for Eligibility
Some add a co-applicant only to boost eligibility, without considering their repayment capacity. This creates repayment stress.
✅ Tip: Only include co-applicants who can financially contribute.
5. Not Having a Backup Plan for EMI Repayment
If one borrower loses income, the other must cover the full EMI. Many don’t plan for such emergencies.
✅ Tip: Maintain an emergency fund or take loan insurance for security.
6. Overlooking Legal Ownership Documents
If all co-applicants’ names are not on the property title, future disputes can arise despite shared loan repayment.
✅ Tip: Ensure ownership documents reflect each co-applicant’s share.
7. Not Considering Relationship Stability
This is often ignored but crucial—divorce, family disputes, or separation can complicate repayment and ownership.
✅ Tip: Discuss long-term financial responsibilities before signing.
FAQs on Joint Home Loans
Q1. Who can be a co-applicant in a joint home loan?
Typically, spouses, parents, siblings, and children can apply jointly, depending on lender policies.
Q2. Do all co-applicants need to be co-owners?
Yes, to claim tax benefits, all co-applicants must also be co-owners of the property.
Q3. What happens if one co-applicant defaults?
All co-applicants are equally responsible for repayment. Default affects everyone’s credit score.
Q4. Can both applicants claim tax benefits?
Yes, provided both are co-owners and co-borrowers, and repayment is made from their incomes.
Q5. Is joint home loan approval faster than individual?
Not necessarily. Approval depends on eligibility, credit scores, and documentation of all applicants.
Conclusion
A joint home loan can ease affordability and offer tax benefits—but only if planned carefully. By avoiding mistakes like ignoring credit scores, unclear ownership, and poor repayment planning, you can ensure a smooth loan journey and safeguard your dream home.
Published on : 29th August
Published by : SMITA
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