Home loan: How to improve your home loan eligibility

It is easier to get approval for a joint home loan with a spouse, or a joint loan with other close relatives, such as parents, siblings, and children.

Home loans are secured and convenient loans and can be repaid over a period of time, through the EMI option. The current home loan interest rates have sunk to almost a 15-year low of 6.75-6.80 per cent on amounts up to Rs 30 lakhs.

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Due to income restrain or low credit score, high debt-to-income ratio, or any other failure to meet the loan eligibility criteria, if one is denied the amount that he/she needs to borrow, taking a joint loan with a relative, increases the eligibility to get that loan. Also, as home loans are generally big ticket size loans, many individuals prefer taking a joint home loan.

Industry experts say it is easier to get approval for a joint home loan with a spouse, or a joint loan with other close relatives, such as parents, siblings, and children.

Going for a joint home loan with a co-applicant who has a better credit profile can boost the chances of the borrower’s loan getting approved, at the same time get eligible for a higher amount.

For some banks, it is also mandatory to have a co-applicant for a home loan, whereas some lenders insist on the co-owner also being the co-applicant. Note that this does not mean that the co-applicant has to be the co-owner. A co-applicant is liable for repaying the loan, in case the primary applicant is unable to service it, while a co-owner of property shares the property with someone else. Therefore, taking a joint home loan with a spouse or a relative comes with its own benefits and perks.

As compared to a joint loan, for an individual loan, the borrower will be offered a loan limit which will be much lower. For instance, a borrower can get loan amount could go up to Rs 60 to 70 lakhs if combined with the relative/spouse’s limit, whereas individually he/she would have been eligible for a loan of Rs 30-40 lakhs.

Along with that, borrowers also get additional concessions on their home loan. For instance, if the wife is the primary applicant for the home loan, the loan can come at a cheaper rate, as most banks offer lower interest rates to women borrowers.

Borrowers can also enjoy increased tax benefits, and most individuals opt for a joint loan just to avail the tax benefits. For instance, in case of a joint home loan with spouse both the spouses separately enjoy the Section 80C tax benefit of Rs 1.5 lakh on the principal amount. Hence, jointly the tax benefit limit is increased to Rs 3 lakh under section 80C.

Additionally, with joint home loans under Section 24 on interest paid for a self-occupied house, the deduction of Rs 2 lakh gets increased to Rs 4 lakh.

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