With lots of women increasingly becoming financially aware and independent, taking up the responsibility of jointly managing the family’s finances has become a common practice for couples. Especially when moving forward to deciding to purchase housing property and take a Navi Home Loan for your dream home, jointly doing so with your wife has not one but multiple benefits. 

Let us explain to you the benefits and conditions to remember when contemplating the thought of taking a joint home loan and property with your wife:

Joint home loan: Lower home loan interest rates for women

When you take a joint home loan in India with your wife being the applicant/co-applicant, most lenders or banks or financial institutions will offer a lower interest rate on Canfin Home Loan, mostly of up to 5 basis points (0.05%) on the standard applicable interest rate. Remember that to avail of this concessional rate; the wife must either be the owner/co-owner of the property and also the primary/co-applicant of Canfin Home Loan.

Joint registration of property: Concession on stamp duty charges

Besides the availability of a slightly lower Navi Home Loan interest rate, many home buyers purchasing property jointly are even unaware of this lesser-known deduction available under section 80C of the Income-tax Act and also the concession available to women. The stamp duty charges and registration fee paid at the time of purchasing the property are eligible to be claimed as deductions; the claim amount is capped at Rs.1.5 lakhs for that financial year. Most states provide a concession of about 1-2% in the stamp duty charges in case the property is solely or jointly owned by a woman.

Remember that you have to claim this deduction in the same year in which such expenses were incurred. Moreover, you would only be eligible to avail of this deduction post the completion of the property’s construction as well as possession.

Higher benefits on tax deductions: Under sections 80C and 24

Firstly, always remember that you, along with your wife, can claim tax benefits on Navi Home Loan only when your wife is both co-borrower as well as co-owner of the house. If she is just the co-borrower and not co-owner, she won’t be entitled to claim tax deductions, even if she is sharing the EMIs. The couple is entitled to separately claim the deductions on principal as well interest repayments on the applicable interest rate on Canfin Home Loan, under sections 80 C and 24, respectively. However, the couple must be joint owners of the property and also contribute their share towards the EMI payments.  

Also, since many homebuyers often tend to take a home loan for purchasing an under-construction property whose possession is expected to be received someday later, but the availed home loan’s EMI repayment starts immediately after taking the loan, even such borrowers can claim tax deduction under Section 24b, for the interest paid during pre-construction period at the applicable interest rate on Navi Home Loan. This can be easily done for up to 5 years (in 5 equal instalments). But keep in mind despite this, the maximum limit on the amount that can be claimed remains capped at the otherwise overall limit of Rs 2 lakh per year, including both pre as well as post-construction period interest repayment.

As far as principal payment is concerned, it can be availed up to Rs.1.5 lakhs per year, whereas interest repaid is eligible for a maximum deduction of Rs.2 lakhs per year. Couples can separately claim the deductions corresponding to the ratio of their ownership of the property. Remember that the combined claim cannot exceed the total principal repaid during that year. 

Moreover, as per this year’s budget 2021’s announcements, an additional interest deduction of up to Rs 1.5 lakh has been granted under affordable housing for home loans sanctioned between 1st April 2019 and 31st March 2022. 

This has been no less than a major impetus to housing for all missions of the Indian government, which was announced in 2019. Home loans like Canfin Home Loan that are taken till 31.03.2022 would be eligible for it. And in order to qualify for tax deduction under section 80EEA, one has to compulsorily be a first time home buyer only, besides the value of housing property being capped at Rs 45 lakh. 

Circumstances wherein wife is eligible to become the co-applicant

The wife has to compulsorily either be the sole owner or co-owner of the property

Amongst the two cases wherein the wife can be accepted as primary or co-applicant of the home loan is that she should either be owner/co-owner of the concerned property. Even if she isn’t earning, she may still be considered eligible to become a co-applicant if she is into joint ownership of the property.

The wife’s earnings and her income are included in the assessment of loan eligibility and capacity.

The second situation in which your wife can become the co-applicant of the home loan is if she earns and her income has been considered while evaluating the joint loan’s eligibility and the overall repayment capacity. Many times, the husband’s Navi Home Loan application gets rejected due to various reasons such as failure to meet minimum income criteria, low credit score etc. In such cases, adding your earning wife as a co-applicant can enhance the chances of loan approval. However, keep in mind that this is possible only if your wife’s credit score, income, debt to income ratio etc., are considered satisfactory by the lender while evaluating the joint loan application and deciding the interest rate on Canfin Home Loan to be assigned for the same.

Apart from a wife who all can be co-applicant?

Co-applying a home loan is subject to lots of sets of terms and conditions that vary from lender to lender, without any particular hard and fast rule. More often than not, lenders generally accept only a few relations as home loan co-applicant, like immediate and/or blood relations, including father, son, mother, daughter, spouse, sister and brother. But, all this entirely depends on the home loan lender’s own set of rules and regulations regarding the valid relations which can be approved as per its list of those who can become co-applicants.

For example, few home loan lenders who don’t wish to take credit risk in co-applicant cases may not allow brothers to become co-borrowers, as there are chances of property disputes later that can lead to irregularity of default in joint home loan prepayment. Moreover, some housing loan lenders may not allow sisters as co-applicants due to the presence of perceived risk of possible non-repayment after their marriage.