Applying for a home loan is a big decision and a huge financial commitment. Once the loan is disbursed, you have the responsibility of repaying the EMIs till the end of loan term, which usually lasts for a couple of decades. And, handling such a responsibility alone may not always be easy.
Sometimes, your income may not be enough to get the loan amount you desire. In such a situation, you can seek help from your family members and apply for a loan with a co-applicant, i.e., apply for a joint home loan.
When you apply for the best home loan in India with a co-applicant, it is like two individuals are applying for a single loan and share the loan’s repayment responsibility. In this write-up, let us know more about co-applicant.
Who is a co-applicant?
As the name suggests, a co-applicant is an individual who participates in the loan approval and underwriting process along with you. A co-applicant is often regarded as the secondary to the principal applicant in terms of the loan’s rights. However, you must not confuse a co-applicant with a co-signer or a guarantor.
A co-signer may assist you in getting the home loan with favourable terms and conditions. However, a co-signer does not have access to the loan amount. In a nutshell, a co-signer functions as a backup for repaying the loan.
Who can be a co-applicant?
The requirement for a co-applicant can vary from lender to lender. However, most lenders have certain standard terms and conditions, which are discussed below:
· For home loans, most lenders prefer a combination of husband and wife. Lenders consider both the spouse’s income while determining the eligibility.
· Some lenders even allow parents to be a co-applicant. This means a father and child duo can apply for a joint home loan. If your parent is also an earning member and has a steady monthly income, you would have higher chances of loan approval.
· A single daughter can also be a co-applicant with both or a single parent as the primary applicant.
What responsibilities do co-applicants have?
If you are the primary applicant for the home loan, and you fail to repay the amount due to premature demise or any other reasons, the co-applicant is responsible to repay the full amount. Irrespective of the terms mentioned in the cooperation agreement, the lender will hold one applicant responsible to repay the full amount. According to experts, a co-applicant is essentially a co-borrower and as a borrower, they are responsible for repaying the loan.
Benefits of having co-applicant for home loan
The likelihood of loan acceptance increases when you apply for a home loan with a co-applicant who has a solid credit score and a steady stream of income.
If the co-applicant has a strong financial profile, the lender may offer you the loan at a lower interest rate.
You can share the repayment responsibility with the co-applicant. This makes the EMI payment more affordable even if you apply for a higher loan. You can use the emi calculator for home loan to compute the EMI payable for the amount you want to borrow and make an informed borrowing decision accordingly.
You and the co-applicant can individually enjoy tax benefits on repaying the home loan.
Applying for a home loan with a co-applicant is an effective way to increase your eligibility and get a high value loan. Also, having a co-applicant makes repayment easier.