Home Loan Co-Applicant: Buying a house is a dream of everyone’s life. Many people save a lot of money for this. Many people are not able to save that much money. So in such a situation, they take a home loan. But while taking a home loan, you have to keep many things in mind.
So that you do not face any problem in repaying the loan. Many times people take the loan alone while taking a loan. Sometimes they also keep a co-applicant along with them. What effect does having a co-applicant have on your home loan application. And what is its benefit, let us tell you.
What is a co-applicant?
Co-applicant is a person who applies for a loan with you in a bank or non-banking financial company. Both co-applicant and applicant are jointly responsible for the loan taken. If you apply for a home loan with a co-applicant, then your chances of getting a home loan increase.
Who can be a co-applicant?
Banks and financial companies that take large loans have some guidelines for becoming a co-applicant. Like who can join as a co-applicant with the applicant. In this, husband and wife can join as co-applicants. Son and father can become co-applicants together. Unmarried daughter and father can become applicants. So, along with this, siblings can also become co-applicants. But no one below 18 years of age can join as a co-applicant with the applicant.
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Benefits of being a co-applicant
The chances of getting a loan increases
If you want to take a loan, then if you file a loan application with a co-applicant, then your chances of getting a loan increase. Because the bank or company giving the loan looks at the income of both you and the co-applicant while reviewing your loan application. Due to which you can also get a bigger loan.
Credit score also benefits
Almost all banks and loan companies check credit score while giving loan. If you have a co-applicant with a good credit score, then it is not very difficult for your application to get approved. And this increases your chances of getting loan at a lower interest rate.
The financial burden is reduced by half
According to Paisa Bazaar’s Communication Manager Malvika Singhal, the biggest advantage of having a co-applicant while taking a home loan is that there is not much financial burden on you. Both the applicant and the co-applicant are responsible for repayment. Due to this, the EMI is divided equally between the two. And there is no problem in repaying the loan.
saves on taxes
Under Section 80C of the Income Tax Act, the applicant and co-applicant taking a home loan are eligible for tax exemption. According to the rules, both the applicant and co-applicant applying for a home loan get a tax exemption of up to Rs 1.5 lakh under Section 80C. Along with this, an additional exemption of up to ₹ 200000 is given under Section 24 (B).
Women applicants get exemption
If there is a female applicant with you while taking a loan, then you can get a loan at a lower interest rate because many banks and companies give discounts to women. This can help you save a lot in the long run.
Loan tenure may increase
If the co-applicant taking the loan with you is young, then the tenure of your loan can increase. This will increase the time period for your EMI. However, due to this, you will have to pay more interest on the loan.
Disadvantages of being a co-applicant
While there are advantages of having a co-applicant while taking a home loan, there are some disadvantages too. If two people take a loan together, then the responsibility of repaying the loan also falls on two people. But if any one of them misses any EMI of the loan, then the credit score of both of them gets affected. But if you do not make the right person a co-applicant, then you may have to face the consequences. That is why be careful while making a co-applicant.
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