While a home loan can be the strongest gift for an individual who is finally deciding to buy a new home, the approval of this loan is not everyone’s fate.
To avoid unwanted situations and defaults, lenders have set strong eligibilities that an individual needs to meet to get approval for a home loan.
But what if we tell you that you can double up on the possibility of being approved for a Loan? Yes, you heard it right! Introducing a co-applicant to your loan application can bring you many benefits in addition to increasing the approval rate.
6 Benefits of Adding a Co-Applicant to Your Home Loan
A co-applicant is a person who takes a portion of the responsibility for the home loan repayment with the primary borrower. A borrower is an individual who may add up to 7 co-applicants if they prefer it on their home loan application. All the co-applicants mentioned in the application will share equal responsibility for repaying the loan. That being said, here are some of the biggest benefits of adding a co-applicant to your home loan:
- Increased Loan Eligibility
When the conversation is about adding a co-applicant or multiple co-applicants to your home loan application, you can rest assured that you will double up on the loan eligibility. By bringing the incomes together when making a joint application for a home loan, individuals generally become eligible for a higher loan amount. With that, they may be able to afford a much bigger and better home than they had planned.
- Better Chances of Loan Approval
While we are adding a co-applicant, it is advantageous to enhance home loan eligibility. It is also crucial to get a discounted rate. However, it is paramount that you analyze the viewpoint of the individual’s repayment capacity and history. If all of those are taken care of, adding a co-applicant will bring you a lot of advantages. And the biggest benefit of this is the better chances of approval for your home loan.
- Shared Financial Responsibility
It is always beneficial when someone shares the burden of ours. And it is especially true in terms of financial matters. With the assistance of a co-applicant, you will be less stressed with your repayments.
- Potential for Better Loan Terms
When you proceed to add a co-applicant with a strong CIBIL score and a good income profile, you increase the chances of availing of a home loan with better interest rates. It is something that happens primarily because of one reason.
When you add a co-applicant to the home loan application, you take away all the risk that is involved for the lender in giving you the required sum as the burden and the liability of the repayment of the loan is shared by various people. Therefore, when a borrower adds creditworthy co-applicants, they have the negotiation edge and are open to better interest rates.
- Strengthening Relationships
In addition to all these massive benefits, when you add a co-applicant for your home loan, you not only share the repayments with them but also understand how these loans work in the application process. From making the application to repaying the loan, you end up strengthening your bonds.
- Tax Benefits
When you apply for a joint loan, the co-applicants may enjoy the available tax deduction separately. However, it can be done if they are co-owners of the asset and contribute to the repayment of the home loan.
We have collected the interest rates across top banks in India to help you compare the rates of a joint loan across different banks, the loan amount they are eligible for, and the tenure they get. Compared to single loan applicants, these figures are quite impressive.
| Name of the Bank | Interest Rate | Loan amount | Tenure |
| Axis Bank Home Loan | 9% | Rs.5L – Rs.10Crs | 1 – 30 Years |
| DBS Home Loan | 10.20% | Rs.50L – Rs.5Crs | 1- 25 Years |
| Federal Home Loan | 8.80% | Up to Rs.15Crs | 1- 30 Years |
| SBI Home Loan | 8.40% | – | 1 – 30 Years |
| Bank of Baroda Home Loan | 8.60% | Rs.1L – Rs.2Crs | 1 – 30 Years |
Considerations and Precautions
Here are some of the things that you need to know that are a big NO when you make that decision to add a co-applicant:
- You are looking to retire very soon
- You are already repaying a loan that you have taken before
- As a single applicant, you already meet the eligibility requirements.
- You have a low credit history.
Conclusion
With so many options available these days, choosing the right lender as per your loan requirement is, without a doubt, a tricky venture. That is why the assistance of experts like CreditDharma is something that money cannot simply buy! Head over to the website to get in touch with the loan experts today.