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Planning to take a joint loan against property? Will this decision be right, understand its profit and loss

highlights

Being a co-borrower does not mean that you are also a co-owner of that property.
Taking a joint loan can help you repay the loan for yourself.
However, at the time of dispute, the matter may reach the court which is a tedious process.

New Delhi. Buying a home is an expensive deal. It takes a lot of money, so people resort to home loans. Generally people take loans only in the name of one person. However, sometimes it also happens that people do joint loan purchases with someone else. The reasons for this depend on different circumstances. For example, the borrower alone being unable to repay the loan or having no money for downpayment etc.

Just like every coin has two sides, similarly every work can have some advantages and some disadvantages too. In financial matters, this is absolutely true. Joint loan also falls in this category and it also has two aspects. Today we will tell you the main things related to joint loan so that you can decide how right it is for you.

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What are the advantages?

  • If the finances of both the borrowers are strong, then the loan amount can be increased. Here, having strong finances means having sufficient income and a better credit score. There are some basic criteria for taking a loan. If both the applicants fulfill it then the loan amount can be increased.
  • In case of joint loan, both the individuals can avail tax benefit. Provided that both the persons are the owner/co-owner of that property. They can get a tax benefit of up to Rs 1.5 lakh under one section of income tax and Rs 2 lakh under another section. It is worth noting that this tax benefit can be taken by both the people i.e. it can be a total tax benefit of up to Rs 7 lakh. However, how much profit you will get depends on the value of your property.
  • In a joint loan, the entire burden of EMI does not fall on any one person. Hence it helps in reducing the burden of debt on your pocket. Also, if you make a female member of the family a co-borrower, then the EMI of the loan can also be reduced.

What are the disadvantages?

  • If any co-borrower fails to repay the home loan EMI, the credit score will be poor for both the borrowers.
  • Although the share in the property is fixed at the time of making the co-owner, but many a times, due to separation, the matter reaches the court regarding the share and getting out of there becomes a complicated process.
  • If you take a joint loan with your spouse and later you get divorced, there is still a possibility of the matter reaching the court.
  • If one borrower pays on the EMI, the other will have to compensate for it. This will defeat the purpose of taking a joint loan.

Is it right to take a joint loan?

Before becoming a co-borrower, decide whether you will be a shareholder in the property or not. Being a co-borrower does not mean that you become a shareholder in that property as well. The choice of fellow borrower is very important while taking a joint loan so as to avoid getting into legal trouble later. If you keep all these things in mind, then a joint home loan can prove to be a better option for buying an expensive home.

Tags: bank loan, business news in hindi, Home loan EMI, loans

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