Purchasing a house is a huge financial decision. Getting a home loan is one of the biggest financial responsibilities. Finding the right home loan plan that will work best for you and getting the maximum benefit out of it is the ideal target. Home loans can be taken individually and jointly. Up to 6 individuals can be joint applicants for a home loan. This is of course after the lending institution determines each individual’s credit standing.
When a married couple avail a housing loan as co-borrowers, they enjoy several benefits. Here’s a list of them:
- Increase eligible home loan amount
Since the loan application has two applicants, individual credit score is checked. When both the applicants have a flowing income, their repayment capacity increases. With a higher credit score and increased capacity of loan repayment, lending institutions approve higher loan amount for married couple than an individual applicant. This means, the married couple can purchase a bigger house of their dreams since the loan amount sanctioned is higher and will meet their needs.
- Double income tax rebate
As a married couple, when the co-borrowers are servicing the home loan in equal proportion, they can claim tax benefit of Rs.2 lakh p.a per head. This means, they can claim up to Rs.4 lakh jointly on home loan interest repayment. This counts for huge savings.
Under Section 80C of the Income Tax Act, an individual can get tax benefit up to Rs.1.5 lakh on home loan and Rs.2 lakh under Section 24. But when a married couple avail home loan jointly with 50:50 ratio, tax benefits can be claimed individually. Combined tax limit for the couple will be Rs.3 lakh under Section 80C of the Income Tax Act, and, Rs.4 lakh under Section 24 of the Income Tax Act.
Depending on the income slab of the individual, the tax rebate will vary. In case the couple fall under the highest IT slab, the total tax rebate will be Rs.7 lakh. This shows that increased income and higher CIBIL score not only increases home loan eligibility, but also helps you save a lot of money in the form of tax rebate.
- Lower stamp duty
When a couple purchases a property as co-owners, they are eligible for a lower stamp duty on the property.
What is Stamp duty?
Stamp duty is an indirect tax levied by the Government of India on the purchase of any property. This is a proof of transaction between two or more parties. As per Section 3 of the Indian Stamp Act of 1899, stamp duty is levied on the property documents for it to be legal. This also boosts the revenue for local government. Stamp Duty is purchased either in the name of the buyer or the seller and it is valid for a period of 6 months from the date of issue to the party.
Government of India offers lower Stamp duty for women property owners. This is to encourage more women to become property owners in the country. If the primary applicant of the home loan is a woman, they enjoy lower interest rates and lower stamp duty.
Here are state-wise details on the Stamp Duty for men and women:
| State | Stamp Duty for Women (in %) | Stamp Duty for Men (in %) |
| Delhi | 4 | 6 |
| Punjab | 4 | 6 |
| Jharkhand | Re.1 | 7 |
| Haryana | Urban – 6 Rural – 4 | Urban – 8 Rural – 6 |
| Rajasthan | 4 | 5 |
| Maharashtra | 6 | 6 |
| West Bengal | Urban – 6 Rural – 5 (Additional 1% if cost of property is greater than Rs.40 lakh) | Urban – 6 Rural – 5 (Additional 1% if cost of property is greater than Rs.40 lakh) |
| Tamil Nadu | 7 | 7 |
| Karnataka | 5.6 | 5.6 |
| Uttar Pradesh | Overall Stamp duty rebate of Rs.10,000 | 7 |
- No succession issue on demise
When the property is owned by more than one person, there are no legal issues of succession in case of demise of one of the property owners. In the event of death, the co-owner who is alive becomes the rightful and sole owner of the property. He/she can decide if and when the property will belong to another successor.
- Longer loan tenure
When the loan amount sanctioned is higher, the applicants can opt for longer loan tenures. This enables flexibility in repayment of the home loan without any financial constraints. Rate of interest of the home loan also becomes lower when the tenure of the loan opted is high. If you repay earlier than your tenure, borrower saves up on the interest of the period repaid earlier as well.
- Lower rate of interest
Home loan applicants with high credit standing are eligible for low rate of interest. More so when the joint applicants have good repayment history & capability. Married couples who are joint applicants in the home loan can negotiate with the bank manager to enjoy lower rate of interest than what is originally offered to them.
Now that you know the many benefits that a married couple can enjoy when they avail a home loan as co-borrowers, what are you waiting for? Reach out to us and we’ll help you with the best home loan plan to suit your needs which also gives you maximum benefit.