Bangalore is one of India’s fastest growing real estate markets, and a joint home loan can work wonders when trying to purchase property. If you are considering taking a loan with your spouse or parent, understanding the advantages and disadvantages of a joint home loan will bring much clarity. A detailed guide will take you step by step through the lengthy process of eligibility, signing documents and the multitude of benefits and risks one can take while opting for a joint home loan.
What is a Joint Home Loan?
A joint home loan allows two or more people to take out a single loan together. In Bangalore, these loans are particularly popular with couples, family members, and business partners. Usually, they are used in conjunction with a regular home loan. The borrowers, in this case, the co-applicants, can combine their finances and therefore get a bigger loan. This allows them to obtain more funds and effectively repay them. This is particularly helpful in Bangalore’s competitive real estate market, where property prices are constantly on the rise
Eligibility Criteria for Joint Home Loans in Bangalore
To apply for a joint home loan in Bangalore, the following eligibility criteria must be met:
- Age: The applicants should generally fall under the age bracket of 21 to 60.
- Income: The total loan eligibility increases with the combined income of both applicants.
- Credit Score: Chances of getting a loan approval are higher with a good credit score, which is above 650.
- Co-Applicant Relationship: Relationship between the co-applicants should be familial (husband and wife, siblings, parents, etc.)
Note: Banks and other financial institutions have their own set of parameters that determine eligibility. It’s always a good idea to confirm with the respective bank or the provided financial institution.
Pros of Joint Home Loans in Bangalore
1. Higher Loan Eligibility
As real estate prices rise in Bangalore, a joint home loan increases the chances of getting a higher loan amount. With the combined income of the applicants, they are able to secure properties in premium locations such as Koramangala, Whitefield, and HSR Layout
- Tax Benefits
Another major benefit of a joint home loan is the tax benefits. Both applicants can claim a deduction of up to ₹1.5 lakh on the principal repayment under Section 80C of the Income Tax Act. Furthermore, both applicants can also claim up to ₹2 lakh under Section 24(b) for other interest paid on the home loan, thus considerably lowering their tax liability.
3. Better Interest Rates
Most of the banks and other financial institutions located in Bangalore provide better interest rates for joint home loans, particularly when each applicant has a favorable credit rating. This can ease the burden of monthly payments, making the loan more manageable over time.
4. Shared Responsibility
For a joint home loan, the applicants share the repayment responsibility equally. This is beneficial for the payment of EMIs as the financial responsibility is shared. It is also convenient for people living in a highly expensive city like Bangalore.
5. Improved Loan Approval Chances
Utilization of credit by two persons increases the chances of approval for a home loan. With steady income along with good credit history from both the applicants, lenders in Bangalore are more willing to accept a joint loan application, thereby increasing the overall approval chances.
Cons of Joint Home Loans in Bangalore
1. Shared Liability
While the capability of paying off the loan can be advantageous, it also entails that if any of the applicants fails to pay do so, the other will be solely responsible for the entire loan. This can be financially burdensome if either of the applicants has unexpected financial difficulties
2. Potential for Disputes
In the event that the co-applicants experience a personal conflict or a breakup, determining the division of ownership and responsibilities for the property in question may be intricate. Disputes pertaining to property in Bangalore, especially in areas with high demand, pose a risk.
3. Impact on Credit Score
A joint default or delay in repayment will adversely impact the credit score of both applicants. Consequently, this may hinder their ability to obtain loans in Bangalore or elsewhere.
4. Difficulty in Future Borrowing
If there are existing joint financial obligations, your ability to secure additional loans in the future may be affected. When appraisal for additional credit is done, lenders consider the debt burden and not the income alone.
5. Complexity in Loan Transfer
If there is a transfer of property, or if an applicant intends to withdraw from an application, there are changes to be made. The flow of legal processes and documentation in Bangalore now seems to involve changing the loan holder or co-applicant too much hassle.
How The Lending Monk Can Assist You in Bangalore
When applying for a joint home loan in Bangalore, it’s important to have the right guidance. The Lending Monk can help by:
- Loan Consultation: Providing specialized counsel on the most advantageous loans available in Bangalore.
- Interest Rate Comparison: Assisting with the comparison of the rates of different banks and financial institutions in Bangalore to find the most suitable offer
- Documentation Assistance: Providing guidance with the application form to make sure that all necessary documents are included.
- Loan Disbursement Support: Looking after all aspects of funding and repayment of the loan after the approval of the loan.
For more information, you can visit their website: The Lending Monk.
Conclusion
A joint home loan in Bangalore is ideal for families or couples who want to purchase property. The advantages—more eligibility, tax benefits, and divided responsibility—are valued. It is important, though, to understand the drawbacks: shared responsibility and possible conflicts. With the right information, including guidance from The Lending Monk, one can seamlessly navigate the home loan process.