Purchasing a property of your own is probably the most daunting and capital-intensive investments a person makes in their life. So naturally, we find ways to make this entire process a little less intimidating by coming up with ideas that enhance loan eligibility. The real estate sector is witnessing a change in trend when it comes to ownership of property. Nowadays, homeowners are progressively shifting towards joint ownership of property. Co-owning a house comes with many benefits. Here is a list of a few of them.
You enjoy tax benefits
From a taxation perspective, jointly owning property proves to be immensely practical. Co-owners of a property can avail income tax deductions on the principal as well as interest amount. This is based on the Income Tax Act section 80C and section 24(B). Each of the co-owners contributing to EMIs can claim minimum benefits of Rs. 1.5 Lakhs every year on the principal amount and around Rs. 2 Lakhs on the interest paid. All in all, you obtain a lot of savings, if both parties opt for a property and a joint Home Loan.
Loan eligibility is enhanced
Improved eligibility for a loan is one of the benefits you obtain when you opt for a joint property. The chances of loan eligibility increase because banks calculate the net monthly income when sanctioning a higher amount of loan. Since it involves the combined income of two individuals, the amount is higher when compared to the income of an individual. You also enhance your chances of securing a Home Loan if there is more than one applicant. This is because it reduces the chances of bad debt. If you opt for a joint Home Loan, getting a loan amount more than your eligibility is also possible.
Ease of property transfer
In India, transferring the property in another owner’s name, in case of the demise of one owner, is a time consuming and draining process. In case of death of one of the co-owners in a joint property settlement, the property can easily be transferred to the other owner without the intervention of legal probes. If the property is bought in joint possession, all you need to do is complete the formalities that require you to register the property in the new owner’s name, and it will be transferred to the other owner with much ado.
You get flexibility in repayment
The repayment process for joint loan applicants moves forward in a hassle-free pace. This is because they are allowed the flexibility in contributing to the EMIs. When it comes to taking repayments forward, co-owners can strategise and come up with a plan on how each of the two can contribute towards the repayment process and to what extent.
Lower stamp duty
Stamp duty accounts for a significant portion of the cost of the house. The government of India is attempting to encourage women to own property, either individually or as joint owners. The stamp duty rate on joint property differs in various states but is usually one to two per cent lower in comparison. In this way, obtaining the lowest interest Home Loan for purchasing a jointly owned property is easier.
Is co-ownership the best path to take?
While there are many advantages when you opt for joint property ownership, you need to ask yourself whether it is the best option for you. While you obtain New Home Loan Interest Rates, you have to ask yourself whether a being a co-owner works for you. This is because; it comes with its share of financial repercussions that may not suit everyone. Make sure you:
- Sign a legal agreement that elaborates in detail the rights of both the parties.
- Discuss contingencies and conclude what needs to be done if things do not work out well between co-owners.
- Split your portions and mention the same in the agreement, at the time of purchasing a joint property through a Home Loan.
These aspects keep you well covered in case things do not work out as they were planned.
Applying for a Home Loan
Whether or not you are eligible for a Home Loan for owning a joint property depends on each of the owner’s repaying capacity. Banks usually examine the co-borrower’s income. If you get the green signal, you have to submit the following documents:
- Documents for address proof
- Documents for identity proof
- Income proof in the form of salary slips
- Bank statements that go back to the last 3-6 months
- Documents of property, for instance, transfer of ownership papers
Making sure both the parties possess these required documents is a must if you want to go through the Home Loan application process smoothly.
While joint ownership assures many advantages, you have to make sure that you decide on co-ownership at the time of the initial purchase.
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