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Joint Home Loan: Few Things to Know

A home of our own is an aspiration that most of us strive for and a home loan is usually the biggest financial liability in an individual's life that needs to be carefully considered. Sometimes you may want to buy a house of a greater value, but you may not be eligible for a higher amount of loan from the bank. This is where opting for a joint loan comes handy. Before opting for a join loan with your parents or spouse you must first understand the implications of this loan.

Understanding the implications

A joint loan is usually taken to meet the eligibility criteria by supplementing the co-applicant's income along with that of the applicant for a better and higher loan eligibility. You can consider the option of taking a joint loan with either your parents or your spouse as it proves to be a more convenient approach for qualifying for a higher value loan and also manage your liabilities jointly.

While a joint home loan increases your eligibility it also distributes the liability of payment and impacts the credit history and credit score of both the borrowers. Therefore, it is vital for both the parties to understand their responsibilities towards the loan and its impact on their finances.

Responsibility of the co-applicant

A co-applicant in a joint loan refers to a person who applies along with the primary applicant. This is done so that the income of the co-applicant can be used to supplement that of the borrower and increase his/her eligibility or credit limit. As a co-applicant, you are completely responsible for the loan if your partner defaults or, under any circumstances, is unable to pay back the loan. Therefore a co-applicant's CIBIL TransUnion Score and report is also checked by lenders before deciding on the loan application. If a co-applicant's CIBIL TransUnion Score is low, it may negatively impact the loan application.

Both borrowers' credit histories, CIBIL TransUnion scores get impacted

A joint loan account is reported on both the individual's CIBIL reports. If the responsible party does not pay on time or does not pay at all, this credit behavior is reflected on the other party's credit report as well. In addition, creditors can approach both parties for payments and collections. On the other hand, the CIBIL TransUnion scores of both the borrowers get negatively impacted in case either of the partners default on the payments of the loan EMIs. Hence, it's imperative that both the borrowers on the loan ensure paying the EMIs regularly on the due date every month.

With a fair understanding of the benefits of opting for a joint loan, given below are some dos and don'ts one must consider before applying for a joint loan:

  • A joint loan requires both the applicants to furnish the necessary KYC (know your customer) documents, bank statements, employment certificate and income tax returns. Ensure that you have the most updated copies of these documents ready with you.

  • Make sure you both check your CIBIL report and CIBIL Transunion score to understand your credit history. If your credit report shows delinquencies and defaults and your credit score is low, make efforts to improve it before you apply for the loan. This will help you avoid unpleasant surprise in the form of loan rejection.

  • If you have already availed a joint loan, ensure that you keep a track of the repayments and are aware of your liabilities in the event that variations are made to the terms and conditions of the loan

  • Do not default on monthly installments as it will have a negative impact on both borrowers' credit history.

  • Keep reviewing your CIBIL report and CIBIL TransUnion score regularly to keep a track of your credit health.

(Harshala Chandorkar is Senior Vice President–Consumer Services and Communications at CIBIL)

Disclaimer: The opinions expressed within this article are the personal opinions of the author.

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Realty Trends

Home prices near most-affordable levels in over 30 years: HDFC

Home prices may have been on an upward spiral for many years, but the cost of owning a house in India remains near the most affordable level in over three decades, shows data compiled by mortgage giant HDFC Ltd.

The average price of a home, purchased with a housing loan, rose to over Rs. 45 lakh in the 2012-13 fiscal year -- marking the fourth consecutive year of uptrend from about Rs. 25 lakh in the year 2008-09, HDFC has said in a presentation.

However, factors like an even greater surge in the personal income levels, tax incentives and lower interest rates, have resulted into houses becoming more affordable to purchase, it said.



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India Property Investment Gyan

Major schemes for affordable housing to be modified: Girija Vyas

NEW DELHI: Major schemes meant for providing affordable housing to urban poor will soon be modified to make them more people-friendly, the government said today and invited the private sector to contribute more actively in this area. 

Speaking to reporters here, Housing and Urban Poverty Alleviation (HUPA) ministerGirija Vyas today said her ministry is modifying all the major schemes including the Rajiv Awas Yojana (RAY), Rajiv Rinn Yojana and the, Affordable Housing in Partnership scheme and added enormous budgetary support has been earmarked during the current plan period. 

Secretary HUPA Arun Kumar Misra told reporters that a fund of Rs 35,000 crore had been allocated to the ministry for the implementation of three major schemes, including RAY, which was being run in as a pilot project earlier under 12th five- year plan. 

He said the ministry would require approval from the cabinet for the implementation of these schemes and efforts would be made that through these funds 2 million affordable houses are encouraged. 

He said that in addition to the central government funds, banks and credit institutions would be providing funds for construction of affordable houses. 

Vyas said that with urbanisation, the number of urban homeless and area under slums had grown. 

Vyas said there was a need for private developers to develop economic models to foster affordable housing for economically weaker sections and lower income group households in urban areas as government efforts in this direction needed to be supplemented. 

Vyas also said a technical group, set up by her ministry, had shown that out of 18.78 million housing shortage in the country, 96 percent shortage is in EWS and LIG category and for this huge investments and private sector participation were required. 

Misra said the group set up by the ministry has suggested incentives for the affordable housing sector included concessions to development-related charges and service taxexemptions. 

It also sought direct tax rebates for affordable housing projects and inclusion of the sector in the 'infrastructure facility' he said and added the task force had felt that governments need to still provide direct capital grant support to affordable housing projects. 

Misra said that in the symposium held today where states, experts and private sector representatives were present, there was unanimity on many of the suggestions.

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Green Property- Eco Homes

Reclaim your city space: Projects in Delhi, Mumbai and Kolkata aim to transform lives

Three projects in three cities aim to transform the lives of people who live close by. The one in Mumbai hopes to transform a congested area into a green precinct; the one in Delhi converted an open drain into a walkway, while Kolkata hopes to bring the crowds back...