Apply for a mortgage? Discover five advantages of taking out a solidarity loan
Apply for a mortgage? Discover Five Benefits of Taking out a Joint Loan Photo credit: iStock images
New Delhi: Owning your own home is a dream of most people in India. This is a big decision because people use a large portion of their lifetime loans or borrow large amounts to own their dream home. Despite the fact that the government encourages condominiums, many people do not choose this option. Co-ownership is very beneficial for co-owners in many ways.
Although it is not necessary for a co-applicant to be a co-owner, some banks insist that the co-owner be a co-applicant. A co-owner has a stake in the property, while a co-applicant is only responsible for repaying the loan in the event that the principal applicant fails to repay the loan. However, to benefit from tax advantages on a mortgage, the two co-applicants must also be co-owners.
Many individuals opt for a solidarity loan only to benefit from tax advantages. You benefit from a higher tax relief, with a solidarity mortgage. For example, the two spouses separately benefit from the tax benefit of article 80C of Rs 1.5 lakh on the principal amount. Therefore, with a joint home loan, you get an improved tax benefit and the limit is increased to Rs 3 lakh jointly, under section 80C. In addition, on the interest paid for an independent house under section 24, the deduction of Rs 2 lakh is increased to Rs 4 lakh, in the case of a joint mortgage loan.
When you jointly apply for a mortgage, the bank takes into account your income as well as that of your spouse to decide the maximum amount of the loan that it can sanction. For example, if your individual mortgage eligibility is Rs 30 lakh, it can go up to Rs 60 lakh if your spouse’s individual limit is Rs 30 lakh. This means that you can buy a larger condominium house.
Lower interest rate
Several banks, including India’s largest lender, SBI, offer lower interest rates to female applicants. So, if you make your wife the primary mortgage applicant, you might get the loan at a lower interest rate. Likewise, some states also grant concessions on stamp duty for home registration for women and couples. Other fees such as the stamp duty required to register the house are also relatively lower for women, but vary from state to state.
One of the main advantages of condominium is that it increases loan eligibility. If more than one person applies for the loan, the bank will look at the applicants’ combined income, which increases the likelihood of the loan being sanctioned.
In the case of an individual property, the succession can be very difficult and sometimes long. Sometimes even unethical means are used to claim ownership. If a person objects to the co-ownership, this can be avoided because the ownership is automatically transferred to the co-owner.