With the government initiative to give a roof to every citizen of India, it has showered many benefits to the home buyers. People who take the loan to purchase a home will be benefited in many ways apart from having a roof by paying out bit sized EMI. The government offers tax benefits and interest subsidies for the home loan seekers. Tax saving that you benefit by taking a home loan will increase a notch if taken jointly. The fact that many are less aware of is 6 individuals can take a home loan together. This act will increase borrowing eligibility individually and repay it collectively will drive you more tax benefits. The current article is to make understand the mechanics of joint home loan.
Joint Home Loan to Increase Your Tax Benefits
The home loan should be taken jointly to make most of it. Apart from being able to borrow above your individual eligibility, it helps you to get tax benefit individually.
When applying for the home loan jointly, one remains as a main applicant and rest of them serve as co-signers of the loan. These co-signers are also called as co- borrowers. 2-6 members can serve as co- borrowers for home loan. Make a note that co- borrower of the home loan should be co- owner of the property to avail tax benefits.
Who can be co- signer of property?
Not everybody will be co- signers of the home loan; there are some rules in place regarding the same. A couple ideally can be co-borrowers of the property. However, it remains their decision whether to remain co-owners of the property. If the parents and children are the co-borrowers of the home loan, the lender may insist the child be the owner of the property. Even siblings can be co- borrowers of the home loan but, they should remain as co- owners of the property if they want to get one.
Every home loan borrower will be eligible to gain a tax benefit under section 24B. You can claim a tax benefit on the interest paid up to 2 lakhs. You can also claim tax benefit on the principal paid up to 1.5 lakhs. Total tax claim you gain on the home loan when taken individually is 3.5 lakh. When you apply for the home loan jointly either with your earning spouse, sibling, it is possible to multiply these tax deductions. However, you should make sure that even the co-borrower of the home loan should have good credit history and higher home loan eligibility to get more. You should also ensure that the co-borrower does not default repay the loan which will impact your credit score further.