Home LoanBusiness 

What are the terms of adding co-applicants in a Home Loan?

There are some common terms like co-applicant, co-owner, or co-borrower, which you might have heard during the purchase of a home or property. Before choosing someone as your co-applicant, it is of prime importance that you go through all the terms and conditions which are linked with the same.

A co-borrower or co-applicant bears the same responsibility that single borrowers possess. The only difference is that a single borrower will have to pay the loan all by himself. But if there is someone who is ready to share the responsibility, then he or she will have to pay the debts equally.

This type of Home Loans is known as Joint Home Loans. Remember, if the repayment of the loan is shared among the co-owners, so will be the ownership of the property. Although, it is not necessary that the co-applicant can be a property co-owner, but a co-owner can be a co-applicant of the property. The lenders generally suggest having a co-applicant instead of co-owner. Following are the people who can be co-owner or co-applicant for taking a Joint Home Loan:

     Spouse: It is an advisable and most common combination for taking the loan.

     Son and Father: If you have only one kid, then the lender will allow the father that he can become owner of the property. But if you have two children, then the lender will suggest you make one of your children the co-owner so that no disputes occur in the future.

     Mother/Father and unmarried daughter: This is the case where the only daughter has the right to become an owner of the property.

     Brother and Brother: In such a case, the lender will allow the borrower to take a joint loan only on one condition and i.e. both of them have to live together on the same property. It is the responsibility of the lenders including NBFCs.

There are some exemptions also. They are:

1.      father/mother and married daughter

2.      brother and sister

3.      sister and sister

A co-applicant cannot be a property co-owner. The lenders have made some inclusions regarding the co-applicant of the loan, even if he is not the co-owner of the house or property. This is the reason why lenders do not disclose the future implications that a co-applicant has to bear. Always keep this in mind that a co-applicant has to follow all the procedure and has to pay equal debts as the owner is paying. Even if a Home Loan applicant is able to pay all the debts, the lender will insist them to keep a co-applicant for repaying the loan.

Benefits of being a co-applicant in Home Loan:

  1. Tax benefits: If the borrower wants tax deduction on his/her Home Loan, then it is necessary that a co-applicant of the Home Loan should be a co-owner as well.
  2. Co-owner: If you are a co-owner of the property, then the lender will insist you to be a co-applicant of the property before taking a Home Loan.
  3. Increase Home Loan eligibility: If you aren’t a property co-owner, but still want to pay the debts to decrease the burden of the other half or family member, then the bank will insist that you become a co-applicant of the property.

 

There are times when you need someone who can take care of your debts. If the burden of paying debts reduces by disbursing the loan amount between more than one applicants, then the Home Loan EMIs will be much easier to pay. 

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