Adding a Co-applicant for Your Home Loan Application? Here’s What to Consider
Everyone visualizes of owning a dream home one day. So, you feel this is the right time to buy your dwelling with a Home Loan. Generally, it is a hefty amount that applicants seek from the banks. And banks, in turn, consider the applicant’s eligibility criteria based on numerous factors. Approval and interest rates are accordingly determined. Do you know adding a co-applicant to your loan application increases the chances of getting an approval?
|Top Banks||Interest Rates||Loan Amount||Tenure|
|Kotak Mahindra Bank||6.75%||Up to Rs. 75 Lacs||up to 20 years|
|SBI Home Loan||6.90%||Rs. 10 Crore||Up to 30 Years|
|Bank of Baroda Home Loan||7.00%||Rs. 10 Crore||30 Years|
|PNB Home Loan||7.10%||Up to Rs 75 lacs||30 Years|
|Bank of India Home Loan||6.85%||5 Crores||30 Years|
Adding a co-applicant is subject to certain terms and conditions. A Co-Applicant for a Home Loan is considered a co-borrower, but he or she, though equally responsible with the main applicant of responsibility and financial commitment, may not be a co-owner. Can anyone become a co-applicant? No. Banks have specified only a few relations of the applicant in this category. These are combinations that include husband and wife, father and son, brother and brother, mother and son, unmarried daughter and mother, and unmarried daughter and father. Sisters, brother and sister, married daughters and parents cannot be co-applicants.
Factors you should consider when adding a co-applicant for your Home Loan:
1. A co-applicant should be financially capable and have a regular income. His or her income can be used to supplement the borrower’s income. For any reason, if the main applicant defaults on repayment, the co-applicant shall be legally liable to repay the home loan.
2. Your spouse can be your co-applicant. The lender will consider the tenure of your Home Loan based on the retirement age of the older partner. Besides yourself, your spouse should also fall below the debt-to-income ratio limit.
3. If you are the only son of your parents, you can add your father as your co-applicant. Your father’s income will also be taken into consideration by the bank.
4. Two brothers together can jointly apply for housing loan provided they stay together in the present property. They should be determined to stay together in the future too in the property for which the loan is applied for.
5. If you are an unmarried daughter, you can add your father or your mother as your co-applicant, provided the property shall be solely in your name. You gain a competitive advantage as your father’s or mother’s income will not be considered. This condition is included by banks to avoid any legal complications in the future that may arise out of marriage.
6. Your co-applicant for your Home Loan shall be entitled to tax benefits depending on his or her contribution.
7. If you are seeking long term debt from your lender, it should be no more than 36 percent of gross income, especially for a mortgage loan. You can qualify the eligibility criteria with the collective income of your co-applicant in case your income is lower than the stated percentage.
8. If your co-applicant has a greater steady income, you may be eligible to Apply for Home Loan for a bigger amount so that you can buy a bigger property.
9. Your credit score should be good, so should be your co-applicants. If your co-applicant is strong financially and has a good credit score, you may enjoy lower interest rates.
Consider the above factors when looking forward to adding a co-applicant for your home loan. This will help you take the right buying decision.
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