Benefits of Having a Co-Applicant for Home Loan
Many people dream of having a home of their own and for that, they find themselves to be depended on a Home Loan. However getting housing finance isn’t as easy as it may seem. Many borrowers face a situation wherein during the process of obtaining a Home Loan they might be ineligible for the required loan amount or tenure. Getting lesser quantum of the loan than they require becomes a hindrance in the process of purchasing a home. So, is that the end of their dream? No, there is a way out – bringing in a co-applicant for your Home Loan.
In financial terminology, a co-applicant is an individual who applies for a loan along with the primary borrower, so that the co-applicant’s income can be utilized to supplement the income of the borrower, thus, increasing his/her eligibility.
Banks and housing finance companies allow only a few specified relations, such as: husband-wife, father-son, mother-son, brother-brother, unmarried daughter and father, etc. to become a co-applicant.
If you’ve Applied for a Home Loan, but the quantum of funding is lesser than you need, it is advisable to get a co-applicant for your loan.
Here are some advantages of having a co-applicant for your Home Loan:
- Getting a creditworthy co-applicant can increase the success rate of your Home Loan approval.
- It can increase your eligibility and you can get a bigger loan quantum. Bigger amount means bigger house.
- A co-applicant might even help you share your loan repayment burden.
- If the co-applicant is a woman, you can enjoy a lower interest rate on your Home Loan as some lenders provide Home Loan to women applicants at discounted rates.
- In case of a joint Home Loan, applicant and co-applicant might be eligible to avail higher tax benefits. As of now, under Section 80C of the Income Tax Act, the Home Loan borrower is eligible to claim tax exemption of up to 1.5 Lakhs on the principal amount and up to 2 Lakhs on interest amount of home loan. In case of joint Home Loan, these benefits are available for each co-applicant.
These were some of the attractive benefits of having a co-applicant for a Home Loan. However, if you are planning to become a co-applicant for someone else’s Home Loan, you should be aware of the fact that all co-applicants are jointly liable to repay the Home Loan. In case of default in payment, there could be an adverse effect on the credit scores of all the applicants.
Also, it is advisable for a co-applicant to buy a separate Life Insurance so that his/her financial burden can be reduced in case of sudden death of any applicant.
A home is an important asset you purchase. Don’t compromise on it just because you are not eligible to get a higher loan amount to afford your home. Bring a co-applicant and increase your loan quantum eligibility.
For more information or expert’s advice on the topic, speak to our Mortgage Specialists today. More than 25 years of experience and excellence, our financial experts can help you get the best Home Loan deals. Visit mymoneymantra, a leading online lending marketplace or call us toll-free at 18001034004 for affordable housing loans.