Why Joint Loans Are a Viable Alternative for Homebuyers

Find out how tax breaks, discounts and lower stamp duty benefit couples and co-borrowers

- Sashind Ningthoukhongjam

When Laxmi Ahir-war and her spouse decided to buy a house together, they not only pooled their resources but also tapped into financial perks like a 2.5 lakh Pradhan Mantri Awas Yojana (PMAY) subsidy, a home loan interest discount, and doubled tax deductions under the old tax regime.

For many homebuyers, joint loans offer savings through enhanced loan eligibility, tax breaks, and lower interest rates. Co-ownership, especially with a female co-borrower, can significantly reduce homeownership costs. But, stricter PMAY rules and complexities of exiting a joint loan must be considered. Here's a look at benefits and pitfalls of joint property ownership.

Loan eligibility, interest rates Applying for a joint home loan can boost your borrowing capacity. Lenders assess the combined income of co-applicants, allowing for a higher loan amount. For example, if Mr. A earns 1 lakh and his wife earns 1 lakh, their combined income of 2 lakh can increase loan eligibility.

"Co-applicants can avail higher loan amounts owing to their combined income, which enables them to choose from a wider range of properties. The responsibility of repaying the loan is shared by the co-applicant, reducing the financial stress on a single person," said Arjun Chowdhry, group head, affluent banking, NRI/Cards, payments and retail lending, Axis Bank.

Not all the co-applicants need to be co-owners. For example, Bank of Baroda allows close relatives as co-applicants to boost loan eligibility without ownership rights. NRIs can also co-apply if they have a stake in the property. All joint holders need to be co-applicants in the loan.