- Pros of Joint Housing Loans
- Tax benefits
- Cons of Joint Housing Loans
- Loan against property
- Home loan Vs Loan against property
Pros of Joint Housing Loans
Rebate on interest rates and easy repayment
Most lenders supply lowered interest rates for ladies’ co-borrowers. Besides, in an exceedingly joint loan, you’ll simply share the compensation burden with your co-applicant. So, your EMI obligations weigh less on your income. But that’s not all! With 2 folks repaying the loan, you’ll pay higher EMIs and shut the loan over a shorter tenure.
Higher loan amount
Taking a joint loan conjointly suggests fulfilling loan eligibility terms for a bulkier loan quantity. How in an exceedingly joint application, you and your mate pool your incomes along, increasing your EMI affordability and creating you eligible for an extended tenure and better budget. With the next loan quantity, you’ll purchase a house oriented together with your housing wishes.
The best issue for a couple of married couples’ joint loans is that you simply receive tax edges for each principal quantity and also the interest paid. Why, yes! because of Sections twenty-four and Section 80C of the tax Act. And since 2 borrowers share the loan, you get double edges and double savings. But what quantity are you able to save? Section 80C allows you to say a tax write-off of Rs. 1.5 lakhs in an exceedingly fiscal year. Moreover, Section twenty-four permits you to say an extra rebate of Rs. two lakhs on the interest paid. So as a few co-owning the property and co-borrowing the loan, you’ll claim Rs. four lakhs below Section twenty-four and Rs. three lakhs below section 80C. That’s a thumping total of Rs. 7 lakhs!
Now that you simply grasp the benefits of joint home loans, allow us to consider their disadvantages.
Transfer of burden
If one amongst the co-borrowers loses their job or faces a money emergency, the compensation burden mechanically falls upon the opposite partner. this may place AN intense money strain which can result in EMI defaults. Not repaying your EMIs on time will hurt your credit score.
Death of mate
If sadly, one of the spouses passes away, the burden of clearing the housing loan once more falls entirely on the living partner.
If a few decide to half ways in which within the future or a co-borrower opts out of repaying the loan, the responsibility to pay the loan rests with one somebody. Inability to repay will result in legal repercussions for each borrower. To avoid this, you’ll sign an agreement mentioning every partner’s share in loan liability beforehand.
The major confusion between a loan and a loan against property arises from the very fact that each loan area unit secured loans. However, that’s the sole similarity between the two. A loan against property is a loan. In this, a receiver will pledge his existing, self-owned property for the addition of cash that equals an explicit share of the value of the property he owns. He should relinquish the property documents to the loaner till the time he repays the loan and also the loan, just like the loan, is repaid in EMIs consisting of the principal loan quantity taken and also the charge per unit. If the receiver defaults on repaying the loan, the loaner will auction the pledged property to recover his investment.
The charge per unit levied on a loan against property is often a small bit beyond a loan. the explanation for this can be that the probabilities of defaulting on mortgage loans area unit beyond regular home loans. Moreover, home loans escort lower interest rates thanks to the government. of India’s ‘affordable housing for all initiative. One will get a loan for a charge per unit beginning at 8.70% whereas the charge per unit for mortgage loans begins at 9.50% and on top.
Another major distinction between a loan and a loan against property is the purpose that the loan is availed. Home loans are usually availed for the aim of buying a home, plot, or property below construction among different things. On the opposite hand, a loan against property permits you to mortgage your existing property in exchange for funds needed for numerous personal reasons like business growth, funding your children’s education or wedding, medical expenses so on.
Loan to price ratio
When you do away with a loan, you’ll get finance of up to ninetieth of the worth of the property. On the opposite hand, the most loan quantity sanctioned just in case of a loan is the hour of the property price, when the property is evaluated by the loaner.
Tenure of the loan
This is another major distinction between a loan and a loan against property. Home loans area unit provided for tenures of twenty to thirty years, whereas a loan against property comes with the most tenure of fifteen years.
While you can not avail of any tax exemption on loan against property, there are any provisions for tax exemption on home loans as per Section 80C and below Section twenty-four of the tax Act.