The home loans can either be taken in a single person’s name or else as joint loans. In the case of more than one person earning in a family, it is always recommended to take joint loans. Joint loans can either be taken as brother & brother, mother & daughter, son & father, or husband and wife. The most common relationship is between husband and wife. The most common relationship between the ones who take joint loans is husband & wife. It is better to plan to take loans early to avail of shorter loan EMI’s and longer tenure. Longer tenure helps in paying a lower amount of installments and also longer tax benefits on home loans. Also, joint loans help reduce the burden on a single person; instead, joint home loans help share the burden of the borrower. Also, the eligibility of the home loans increases in case of the joint loans being taken. Joint loans increase the chances of getting loans easily as the banks get surety about the loans amongst the borrower. If any one of the people is unable to pay the EMI, the other person is there to compensate for the same.
The bank has the right to seal the property in case of the loans defaulted. Also, the bank has the right to charge a penalty to the borrower in case of a delay in payment of the loans. Thus, in the case of joint loans, the chances of default are very less as both persons face financial difficulties at a time are very less. In a very rare case, the loans can be defaulted due to job losses or other financial problems, but still, there is the support of other people to pay the loans. Also, in the case of the CIBIL score of one of the people, if found slightly lower, the bank can still approve the loans by seeing the credit score of another borrower. These days the population of working women is increasing, and thus, joint loans eligibility is possible in most families. The housing loans can thus opt from any of the lenders of the borrower’s choice, which can get the loans approved of the borrower and the ones who charge the lowest interest rates. Dual tax benefits can be claimed in the case of the joint loans when both the people have their incomes and both the persons are contributing to the loans installments.
Ways of increasing the tax savings through joint loans
- Tax benefit under section 80C:
While paying the installments, the borrower can claim the tax benefit of Rs.1.5 lakh while paying the home loan principal amount. Thus in the case of the dual person availing joint loans can thus help the borrower save double tax. In case of the maximum capping of Rs.1.5 lakh, the borrowers can save a maximum tax of up to Rs 3 lakh.
- Tax benefit under section24:
In the case of paying the interest on the home loans, the maximum tax benefit that a single person can gain is Rs. 2 lakh. While as in case of two persons paying the installments, a tax benefit can be gained up to Rs. 4 lakh maximum. Thus in the case of interest repayment, higher tax benefits can be gained.
- Benefits on stamp duty & registration:
The registration and stamp duty charges are additional taxes that the buyer has to pay over and above the property value. Thus, in that case, if there are women as joint borrowers for the home loans, then most of the state governments provide rebates on the stamp duty. Usually, a rebate of 1-2% is given to the women borrowers. As the cost of the property is high, the property buyers can benefit largely through the transaction by availing rebate on the stamp duty.
We can conclude that there are many tax benefits on joint home loans. Thus it is recommended that the borrowers take joint home loans if possible in case of the two members of the family are earning. Also, the loans should have the joint name of the women in case of the borrower to avail lower interest rates and take the benefit of lower stamp duty charges and a tax paid on the property registration.