Articles >> Home A Joint Efforts

 

A home loan not only requires more caution with money management and monthly budgets, but also demands some smart thinking on the part of the individual availing it

Banks insist that all coowners of the home must be co-borrowers in a joint home loan One could team up with parents or the spouse to be able to maximize the benefits of a joint home loan Some banks allow brothers to take a joint home loan provided they opt to become coowners of the property Exceptions being sisters, friends or unmarried couples living together as most banks generally don't allow them Key advantages of a joint home loan Banks do not allow a person to borrow to an extent where their EMI exceeds more than around 40-50 per cent of their monthly income. This ensures that there is no stress on an individual's monthly budget. With combined incomes to decide loan eligibility, one gets better loan amount All co-applicants are eligible for simultaneous tax rebates under Section 80 C for principal repaid and under Section 24 for interest repaid. However, these tax deductions are capped at Rs 100,000 for the principal repaid and Rs 150,000 for the interest repaid It's best to opt for an equal co-ownership of the property and split the tax benefits of the home loan equally. In case one falls under a smaller tax bracket, it is good to let the partner with the higher pay make a higher contribution towards the home loan resulting in a better tax benefit Points to note Tax slabs may change according to new budget each year and there can be changes in the gross income, not to mention changes in the total principal and interest repaid in every new year. Then, interest repaid will be lesser and the principal repaid will be higher during the later years of loan For tax purposes, it is best to procure a home loan sharing agreement, detailing the ownership proportion in a stamp paper, as legal proof for ownership. So taking a joint home loan has the twin benefit of increasing loan eligibility and maximising tax rebate