Owning a home individually is definitely not a cup of tea for many aspiring homeowners. Thus, the need to opt for a home loan with the longest tenure is the one big thing that comes to your mind. But, now with the option to avail huge tax benefit you as a home buyer must look for a smart option and i.e. having a co-borrower to avail home loan.
Who is a Co-Borrower?
This is the person who shares the home loan amount that you are availing to purchase a residential property. Also, the person is equally responsible to pay the entire home loan amount similar to the actual loan borrower.
Hence, you might become a helping hand to a loved one and to make it work one should know about the ways to enhance co-borrower eligibility.
People who can be added as Co-Borrower
A person is in close relation with the actual home loan borrower is usually considered as the Co-borrower and thus:
Firstly, the spouse gets preference to share the burden of a home loan. This is so because the couple is solely responsible to run a house including ration budget, bills and everything necessary of living. Hence, they are jointly responsible to repay the home loan EMIs.
Secondly, the Daughter, Son or parents can be the co-borrowers as these are true to relationships and also stand by each other when a person needs financial support. But, here the parents are considered as the Co-borrowers only after their financial condition is assessed.
The bank or a financial lender will calculate the earning life and value of a person and hence having parents as a Co-borrower might become a drop-later option to avail a home loan.
Things Financial Lender Consider Before Sanctioning Loan to Co-Borrowers
Getting a person onboard is a responsible task for the financial lenders thus there check the person’s financial condition, repaying capability, regular income and his/her performance based on the tax that is paid every year.
In case of a child being a Co-borrower, the bank/financial lender suggest making him/her the first owner of the property so as to minimize the risk of disruption in paying home loan EMIs.
The bank/financial lender also do not consider retired parents as the Co-borrower because of their non-earning condition.
People Who Can’t be added as Co-Borrower
Apart from the close relations of parents and children, the bank/financial lender usually does not grant few people the right be a Co-borrower. In this list,
brother and a sister, only sisters or only brothers are included. But, the applicant can convince the lender to make him/her a co-borrower by providing proof such as sharing the responsibility to run home and staying at a common home.
But the person being presented as a co-borrower for a home loan must have reached or crossed his/her marriageable age.
The decision to make or not to make such a person a co-borrower varies from case to case.
People Who are denied to be Co-Borrower
The bank/financial lender has their criteria to make a person Co-borrower and thus, an unmarried couple and friends are denied from the option of being a co-borrower in a home loan as these relationships are at the risk of vanishing in case things go wrong between the people themselves.
Only the business partners are eligible to be a co-borrower but for availing a business loan only.
Tax Benefits to be availed by a Co-Borrower
It is not mandatory for a co-borrower to be the joint property owner and thus the person is not eligible for tax benefit by default. A Co-borrower can only avail the tax benefit if he/she is actually taking part in depositing EMIs on time.
A person can avail tax benefit in the ratio of which he/she is a co-borrower.