Even though there are benefits to taking a joint home loan, it comes with its own set of advantages and disadvantages. Joint home loans were viewed to have added more benefits like slashed interest rates for women owners, and reduced registration charges and tax liabilities. Experts say that there are inherent problems in joint home loans, currently.
Also Read- 7th Pay Commission: 4% DA hike for employees likely soon. Check details
“Cons of Joint Housing Loans include shared liability, where both partners assume joint and several liability for the loan, leading to potential financial risks in case of default. Furthermore, failure to make timely payments can negatively impact the credit history of both co-applicants, affecting their future borrowing abilities,” said Amit Gupta, MD, SAG Infotech.
In the event of separation or divorce, a joint home loan can lead to legal complexities, making it essential to have clear documentation in place.
Read More: Mutual funds break multiple records in September
“Additionally, joint loans limit borrowing flexibility until the loan is repaid, which may affect individual financial goals,” added Gupta
The joint home loans have their disadvantage for both the applicants. “When one applicant voluntarily or involuntarily decides to move out of the repayment potential (that is due to the job loss). The partner who has no mainstream income is obligated to stay as a co-applicant to repay the loan till its tenure; and, on the other hand, the partner who pays the EMI in full cannot claim the complete benefits on income tax,” said Dr. Subhashree Natarajan, Professor and Dean, School of Business and School of Economics, RV University.
Owning a house was a necessity to many and an investment to a few sections, in India; and was considered wise when it was funded through a Home Loan. However, Gen Z considers home loans differently.
“For Gen Z, home loan is a liability that limits them to geographical boundaries, erodes the opportunity to actively invest and multiply their wealth, fixed commitments cause stress especially with income streams being unstable,” said Dr. Subhashree Natarajan
Read More: Maximize your savings and lower your taxes with THESE 5 investment schemes in India
Join home loan income tax rules
As per Section 26 of the Income Tax Act, in case of property jointly owned the joint owners shall be treated as owners of their share in the property and will be taxed separately for such share. “Since the property is jointly owned, both husband and wife are entitled to claim the benefit of interest under Section 24 as well as in respect of repayment of the principal amount of the home loan under Section 80C provided both are servicing the home loan,” said Tax and investment expert Balwant Jain.
