Home Loans: How To Improve Your Home Loan Eligibility
Home loans are secured and convenient loans and can be repaid over a period of time using the EMI option. Current home loan interest rates have fallen to a nearly 15-year low of 6.75-6.80 percent for amounts up to Rs 30 lakhs.
Denial of the amount required to borrow a joint loan with a relative increases eligibility for the loan due to income constraint or poor creditworthiness, high debt-to-income ratio, or other failure to meet creditworthiness criteria. Since home loans are generally large loans, many individuals prefer to take out a joint home loan.
Industry experts say it is easier to get approval for a joint home loan with a spouse or a joint loan with other close relatives such as parents, siblings, and children.
A joint home loan with a co-applicant who has a better credit profile can increase the chances of the borrower’s loan being approved while receiving a larger amount at the same time.
For some banks it is also mandatory to have a co-applicant for a house loan, while some lenders insist that the co-owner is also a co-applicant. Note that this does not mean that the co-applicant has to be a co-owner. A co-applicant is responsible for repaying the loan if the main applicant is unable to service it while a co-owner shares the property with another. Hence, taking out a joint home loan with a spouse or relative has its own perks and perks.
Compared to a joint loan, the borrower is offered a significantly lower credit limit for an individual loan. For example, a borrower can get a loan amount of up to Rs 60-70 lakhs when combined with the relative / spouse’s limit, while individually he / she would have been eligible for a loan of Rs 30-40 lakhs.
In addition, borrowers receive additional perks on their home loan. For example, if the woman is the main applicant for the home loan, the loan may come at a cheaper interest rate as most banks offer lower interest rates to female borrowers.
Borrowers can also enjoy increased tax breaks, and most individuals opt for a joint loan just to take advantage of the tax break. For example, in the case of a joint home loan with the spouse, both spouses will enjoy the Section 80C tax benefits of Rs 1.5 lakh on the principal amount separately. Therefore, the tax break limit under Section 80C is increased to Rs 3 lakh.
In addition, Section 24 joint home loans for interest on a residential home will have the deduction increased from Rs 2 lakh to Rs 4 lakh.