Can live-in partners seek a joint home loan?
Now-a-days, live-in relationships are becoming popular in our country. With more and more youngsters moving into cities to build their careers, many decide to move-in with their partners to a new home. But perhaps not everyone will have a heavy pocket in the initial stages of their career. Here comes the role of a joint home loan. Can live-in partners seek a joint home loan to invest in a property? Following are few points live-in couples to know while seeking a joint home loan:
Banks do not give joint loans to live-in couples/friends:
Live-in relationship is considered as a social stigma in India and this form of relationship is still not accepted by our society. This kind of relationship is not legal and is treated as two friends staying together. So co-borrowing can be difficult as the couples are staying together without getting married. The main reason for restricting joint home loans is that, in case any dispute arises between the two borrowers, banks will have a problem in getting EMIs from the co-borrowers.
In case of a lender:
Lenders are selective in granting loans especially when a live-in couple/friends approaches for a joint home loan. Lenders will need to know the complete details of the person with who you are co-borrowing. A joint home loan can be taken only with one’s spouse, parents or siblings. Various banks grant joint home loans to brothers who are the co-owners of a property and co-borrowers. The co-owner is a person who has a share in the property and a co-borrower is one who is liable to pay the loan amount.
Benefits of co-borrowing and co-ownership:
Co-borrowing boosts the eligibility of a person for other loans and also gets him/her a share of down payment amount as the banks calculate the eligibility by including the income with that of relative’s wherein the relative should be the co-borrower. It is important that both the persons should be the co-owner because it will be easier to pay off the loan in a short period. However banks are selective in extending this aspect of joint home loan to other relatives other than spouse, siblings, parents and children.
Benefits for co-applicants:
Apart from just the eligibility, co-applicants can also avail the benefit in the form of tax benefit under the Section 80C and section 24. Co-applicants can claim tax deductions under a condition that the co-borrower also should be the co-owner of the property. Both the joint owners of the property can claim the income tax benefits individually. Each borrower according to the housing loan benefits will be eligible for a maximum deduction of Rs. 1 lakh and Rs. 1.5 lakh associated to principal repayment and interest payable on the home loan under Section 80C and Section 24 of Income Tax Act. However, if a person is just the co-borrower of a loan and not the co-owner of the property, he/she cannot claim tax rebates. Also if co-owners have the equal ownership of a property and the share of the loan is 2:1, then the tax benefits can be availed based on the same ratio.
