Buying home? Get someone to join you as a home loan Co-Borrower
With sky-rocketing prices of abodes in double the multiples of an individual’s salary, it is difficult for us to buy our dream home on our own, leaving us with the option to raise home loans. But, do you know how can you enhance your loan eligibility? Either, opt for a loan with longest available tenure or getting a home loan co-borrower to join you in raising the loan.
Now, who are these co-borrowers?
When you talk about co-borrowers for a home loan, first preference is always given to your spouse, i.e. borrowers spouse. The income of both of you will be clubbed for the purpose of paying the EMIs of your home loan. From the financial point of view, sons, daughters, and parents are relatively strong relationships, therefore, they are preferred at second for home Loan co-borrowers.
Remember, when you are including your son, daughter or parents as co-borrower, their age is important in determining the eligibility of loans. And, in case of your parents, their remaining earning life will be taken into account. Therefore, if your parents are retired, they cannot service your home loan as they do not have any income.
Similarly, if you are willing to let your daughter or son join as home loan co-borrower, then ensure that they be the first owner of the property so that the loan can be serviced properly. For the dynamics change when they get married and to service your home loan their ability does not remain certain.
Furthermore, if you are willing to let your brother or sister be co-borrower for a joint home loan, it is generally not accepted by the banks. But if your siblings convince the lender that their incomes will be pooled together to service the loan then things can work out, Not only this, the lender may reject the plead if your siblings are not staying together or are not past general marriageable age.
People not eligible as joint borrowers at any cost-
Unlike, the business loan granted to your partners in the business, friends, partners and couples unmarried but living together and other relatives are refrained to join as home loan co-borrowers. Because these relationships are not considered to be strong therefore lender avoid approving home loan application in such cases.
What do you think are the benefits associated with raising loans with Joint borrowers or Co-borrowers?
As a co-borrower is not necessarily a co-owner of the property, therefore their eligibility to claim the tax benefits is not automatic.
A joint borrower can claim the tax benefits only if he is co-owner of the property and servicing the home loan properly. The ratio in which they serve the home loan will be the basis to decide the ratio in which they will claim the tax benefits on the home loan. Servicing home loan ratio is different from the ratio in which one is the owner of the property, for co-owners not necessarily have to service the home loan.
Also, read avail home loan or self-financed investment.
To put it simply, if you are planning to invest in a property and want to convert your monthly rentals into your Home Loan EMIs, then the fastest way to enhance your home loan eligibility is getting someone in to be your joint borrower, provided other conditions are also fulfilled.