Buying a house or apartment takes a huge amount of money, which can be difficult to collect in a short time for a regular salaried individual. While it’s possible to gather the necessary amount if you save for years, inflation will not allow most people to buy their dream homes in their youth. And home loans might also not provide you with the right amount of money to buy the home you want.
So, if you want to buy a nice home before turning 30, joint ownership of the property is one of the best ways to go. With this, you can own property together with one or more of your family members. But is it worth it? Learn about the benefits of joint ownership of house property to make a solid decision.
There are no limitations on who can be a joint owner of a housing property. According to the law, it can be absolutely anyone, whether it’s your parents, siblings, children, spouse, or anyone else. In addition to that, even if someone is not earning an income, he/she can still be a co-owner with you. You can take care of the financial liability all by yourself while still securing the benefits that come with joint house property ownership.
Yes, you can co-own a housing property with a member of your family or a close friend. But why should you go through all the hassles to add another co-owner to a property agreement?
Well, the answer is benefits.
Joint ownership of house property can provide you with a lot of benefits, which would have been hard to get the other way around. Let’s take a look at the top four benefits of jointly owning a property.
Getting a boost in home loan eligibility is one of the biggest benefits of joint ownership of a house. When you apply for a housing loan, the lenders check your gross monthly income to determine the maximum loan amount they can lend you. For example, the loan amount granted to a person with Rs. 80,000 monthly income will be a lot higher than the loan amount granted to another person with a monthly income of Rs. 40,000.
So, if you want to secure a higher loan amount, you should apply for the loan with a family member who has a decent monthly income. Clearly state to the lender that you plan to co-own the house with the family member you are applying for the home loan with. This way, it becomes less risky for the lenders to sanction higher loan amounts.
If you jointly own a house with one of your family members, we have good news for you. Both you and the other co-owner can get Rs. 1.5 lakhs of tax benefits on the principal repayment of the home loan under Section 80C of the Income Tax Act, 1961. You both can also claim an Rs. 2 lakhs tax deduction on the interest repayment of the housing loan under Section 24.
And wait, there’s more. Both you and the other co-owner can claim a deduction on the stamp duties and the registration fees as long as it doesn’t exceed Rs. 1.5 lakhs margin.
Nowadays, more and more Indians are buying new apartments instead of buying or constructing independent houses. Because of this, real estate and law experts recommend buying apartments with one or more co-owners from your family. This way, if one co-owner of the apartment dies because of old age or an accident, the property will be transferred to the remaining owner(s) without any legal hassle. All you need is a fresh registration of the apartment with a property lawyer.
You already know that buying a home with joint ownership increases your chances of getting a home loan with a large principal amount. However, the benefit doesn’t end here. Getting a home loan with one or more co-owners makes it easier for you to pay the EMIs. You will only have to pay a portion of the total monthly instalment. You can also decide the ratio with the other co-owner(s). This way, you will only have to pay a fraction of the EMI according to your convenience.
Although the joint ownership of house property comes with a lot of benefits, it also has a few disadvantages. We have explained the two most common disadvantages of joint ownership of property below.
Joint ownership clearly involves more than one person during the loan application process. And because of this, lenders usually take more time than usual to process all the necessary paperwork. Lenders need to ensure that the documents related to each and every co-owner is authentic to eliminate the possibility of forgery. As a result, the documentation procedure takes two or three times longer than usual, delaying the whole application and loan approval process.
When you and the other co-owner(s) apply for a home loan with joint ownership of a house property, all of the co-owners also have to pay the EMI for the home loan together. That’s why if one of the co-owner doesn’t pay his/her portion of the EMI on time, the whole EMI of a month will be defaulted, negatively affecting every joint owner’s credit history and CIBIL score.
If you have come to this point, you should have a clear idea of the advantages and the disadvantages of joint ownership of a house property. The joint ownership will allow you to borrow more money as a home loan, makes EMI repayment easier, and gives you generous tax benefits under Section 80C and 24 of the Income Tax Act, 1961. It allows you to transfer the full ownership of the property to any co-owner with ease.
However, it also comes with a few disadvantages, including the delay in home loan approval and its possible negative influence on your overall credit score. Weigh your options carefully before deciding to buy a house property with joint ownership.
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