People generally take the home loan due to a handful of reasons like owning a new home, repairing one or constructing a new house. The process of application of a home loan is easy, and one can also apply for it jointly. Being secured credit, the property being constructed or bought is kept as collateral with the lender until the completion of the amortization period.
Here you can get detailed information about a joint home loan. It is taken jointly by two people from a bank. The pros and cons mentioned here can help you to determine whether it will be comfortable for you to take a home loan jointly.
Pros of Joint Home Loans
There are many advantages of joint home loans. Here are some benefits that you must know.
The Lesser Burden of Debt
The burden of debt is directly linked with any loan. On taking a loan jointly, you can experience less burden due to the presence of your partner. You can conveniently share the amount of monthly EMIs. There will be a chance of convenient repayment where you can share the money in flexible fractions. Remember that the loan providers only require the exact repayment within time.
Balance in Credit Score
The credit score of the borrower is considered as eligibility criteria for the lender while sanctioning home loans. Even if your credit score is drastically low, but your partner has an exceptional one, the chances of home loan approval become higher. Try choosing your spouse for taking the home loan with you if she has a good credit score.
Elevated Amount and Tax Deductions
The capital amount of a joint home loan can elevate as there are two borrowers. The banks providing such loans always assume that two partners will be able to repay the loan quite easily. Make sure your collateral is not too old as it might restrict your chances of getting a home loan.
According to article 80C of the Income Tax Act, there is an opportunity for every borrower of a joint home loan to appeal for a tax deduction. The law might at times permit decent tax deductions up to Rs. 2 lakh on the interest and Rs. 1.5 lakh on the principal capital of the loan.
Cons of Joint Home Loans
The joint home loans have some cons, and you need to refrain from falling into such situations. Severe legal trails can run upon you, and you might lose your property if you are unable to clear the EMIs of the joint home loans.
Escape of the Co-borrower
This is the primary as well as the most occurring phenomenon in case of a joint home loan. This is dangerous for you as a financial emergency in always uncertain and can hit you anytime. In the absence of the co-borrower, only you have to repay the whole amount.
Loan Generation is Delayed
You can expect a decent delay in the generation of the loan on applying for a joint home loan. The bank generally takes time to verify a lot of documents of both partners before disbursing the loan amount. Moreover, the bank checks if the ownership of the securities is authentic for both the partners.
Joint home loans are generally preferred by more people who have an urgent necessity of house renovation, extension, or reconstruction. You must apply every strategy that allows you to enjoy the advantages mentioned above. On the other hand, you need to have an excellent understanding of your partner. A partner who withdraws to be a borrower can be dangerous for you. If a lump-sum amount is granted to you by the bank as a joint home loan, you might completely fail to repay it.