Unlock Savings: Exploring Joint Home Loan Interest Rates

Home loans are high-value loans. Therefore, to minimize the chances of loan default, lenders encourage loan applicants to add a co-borrower, especially if the primary applicant has low home loan eligibility or if the primary borrower wants to avail themselves of a loan amount higher than they are eligible for.

When two individuals apply for a home loan together, the burden of loan repayment is not on one individual but on two separate people. It is thus that the chances of loan default reduce considerably in the case of joint home loans. 

Further, when two people apply for a home loan, lenders take into account both the loan applicant's income and repayment capacity while deciding the loan amount to be sanctioned and the terms and conditions of the loan. It is thus that when two individuals apply for a home loan together, availing oneself of a higher loan amount becomes easier. 

Further, if both people have excellent credit profiles, negotiating for better loan terms and conditions, such as low home loan interest rates and lower processing fees, becomes easier. Loan applicants must also keep in mind that many lenders offer lower interest rates to female borrowers. 

Thus, when a male home loan applicant adds their wife or mother as a co-borrower, they automatically become eligible for lower home loan interest rates. 

Joint home loans also offer added home loan tax benefits. Individuals who have availed of a home loan together can claim tax benefits separately under Section 80C and Section 24b of the Income Tax Act.

For those of you who do not know, Section 80C allows for tax exemption up to a maximum of Rs.1.5 Lakh on payments made towards the repayment of the principal component of one's home loan. 

Payments made towards the repayment of the interest component of one's home loan can be claimed under Section 24b of the Income Tax Act. The maximum limit permissible under this Section is Rs.2 Lakh, irrespective of the number of home loans one has. Therefore, by opting for a joint home loan, one can increase the tax benefits they are eligible to claim through their home loan from Rs.3.5 Lakh to Rs.7 Lakh.

However, borrowers must know that not everyone qualifies to be joint home loan borrowers. Here are some examples of relationships that qualify for a joint home loan: 

1. Father and son 

2. Brother and Sister (this is allowed only if the sister is the main applicant. If the brother is the main applicant, this combination automatically becomes ineligible for a joint home loan. Further, two sisters cannot apply for a home loan together)

3. Unmarried daughter and her father (In this case, while deciding how loan eligibility, lenders do not take into account the father's income to avoid issues that arise post-marriage) 

4. Husband and Wife 

In short, joint home loans offer several benefits and if you are planning to apply for a home loan, consider adding a co-borrower. However, choose to borrow money along with someone you completely trust and rely on.