This branch is the loan that is taken by two or more individuals to buy a property. The same has become popular in recent years due to the various benefits that it offers. Stay tuned about some of the advantages in the following article:
The primary advantage lies in an increase in the eligibility of the applicants. Since the loan is taken by many individuals, the income of all the applicants is considered. This is done while determining the loan amount. This means that the applicants can apply for a higher loan amount, which can help them buy a better property.
For instance, if a single person is earning a salary of Rs. 50,000 per month and is eligible for a loan of Rs. 30 lakhs, a joint home loan with another person earning Rs. 50,000 per month can increase the loan amount to Rs. 60 lakhs. This can help the applicants buy a bigger and better property.
Lower Interest Rates
Another advantage of taking a joint home loan is that it can help in reducing the interest rate on the loan. Banks and financial institutions offer lower interest rates on joint home loans as compared to individual home loans. This is because the risk of default is lower when the loan is taken by many individuals. Moreover, the joint home loan also offers the opportunity to negotiate a better interest rate with the lender.
Increased Tax Benefits
A joint home loan also offers increased tax benefits to the applicants. Both applicants can claim tax benefits on the principal and interest repayment of the loan. This can help in reducing the tax liability of the applicants. Additionally, tax benefits are also available on the registration and stamp duty charges paid while purchasing the property.
A joint home loan also helps in sharing the liability of the loan between the applicants. This means that both applicants are responsible for repaying the loan. In case one of the applicants is unable to repay the loan, the other applicant can take over the liability. This reduces the burden of loan repayment on a single individual and ensures that the loan is repaid on time.
Improved Credit Score
Taking a joint home loan also helps in improving the credit score of the applicants. This is because the timely repayment of the loan helps in building a positive credit history. Moreover, since the loan is taken by many individuals, the repayment responsibility is shared, which reduces the chances of default. This helps in improving the credit score of both applicants.
Joint Ownership of Property
A joint home loan also ensures joint ownership of the property. This means that both applicants have an equal share of the property. This can help in avoiding any future disputes related to ownership of the property. Moreover, joint ownership of the property also ensures that both applicants have an equal say in the decision-making related to the property.
Easy to Qualify for Loan Balance Transfer
Another advantage of taking a joint home loan is that it is easier to qualify for a loan balance transfer. A loan balance transfer allows the applicants to transfer their existing home loan to another lender offering a lower interest rate. Since the loan is taken by many individuals, it is easier to qualify for a loan balance transfer, which can help in reducing the interest burden of the loan.
In conclusion, a joint home loan offers several advantages to the applicants. It increases loan eligibility, lowers the interest rate, offers increased tax benefits, shares the loan liability, improves the credit score, ensures joint ownership of the property, and makes it easier to qualify for a loan balance transfer. It is, thus, an ideal option for individuals who are planning to buy a property and want to share the financial burden with another person.