Before going in for a joint loan, both the parties must understand and plan the roles, responsibilities as well as the implications of the loan. A person's income is the most crucial factor for deciding the eligibility of the amount of loan that can be given to him.In case an individual's income falls short of being eligible for a large-value home loan, he may consider the option of availing a joint loan along with another earning member of the family-typically, the spouse or parents.
Before going in for a joint loan, both the parties must understand and plan the roles, responsibilities as well as the implications of the loan.
A person's income is the most crucial factor for deciding the eligibility of the amount of loan that can be given to him.In case an individual's income falls short of being eligible for a large-value home loan, he may consider the option of availing a joint loan along with another earning member of the family-typically, the spouse or parents.
A joint home loan is given to two or more borrowers. Additional borrowers may have better credit history and more collaterals to help them qualify. However, before going in for a joint loan, both the parties must thoroughly understand and plan the roles, responsibilities as well as the implications of the loan, in case of unforeseen exigencies.
CO-OWNERS, CO-APPLICANTS, CO-BORROWERS
Co-owner:
(1.) A co-owner has a legal share in the property.
(2.) Minors are not eligible to be co-owners of a property according to Indian laws.
Co-applicant:
A co-applicant applies for the sanction of the loan along with the main borrower. The inclusion of a co-applicant increases the loan eligibility by supplementing the primary borrower's income. Sometimes, he is also referred to as a joint applicant.
Co-borrower:
A co-borrower shares the responsibility of the repayment of the loan. He is actually deemed to have borrowed the loan along with the main borrower and is liable to repay the share of the main borrower in case of his death or inability to make payments.
Understand Responsibility:
(1.) In case you are the primary borrower, the responsibility of the loan repayments rests with you and only if you fail to do so will it pass on to the co-applicant or secondary borrower.
(2.) Also, remember that missing the payments on your part will not only affect your CIBIL Report and CIBIL TransUnion Score but also your co-applicant's credit report and credit score too.
On the other hand, the co-applicant must realize that if the primary borrower is unable to repay the loan, it is the co-applicant's responsibility to pay up the dues towards the loan. If neither of them ends up paying the outstanding amount, it will reflect negatively on both their CIBIL reports and will also undermine their CIBIL TransUnion Score.
Unfortunate Circumstances:
Life is unpredictable and there may be unforeseen circumstances which may affect your repayment pattern. Disturbing as they may seem, it is important to note the effect they will have on your credit history.
Death: In the event of the sudden death of the primary borrower, the responsibility of the repayment of the loan will automatically pass on to the co-applicant. For example, Ritwik Ahuja and his father Jayesh Ahuja decided to move into a bigger house for the growing family and took a joint home loan, with Ritwik as the co-applicant.
A few months later, Jayesh suffered a fatal heart attack and passed away. Ritwik must now pay off the rest of the dues of the home loan to ensure that the loan EMIs do not go delinquent and there is no negative impact on his credit history.
Therefore, ensure that your co-applicant and you are fully aware of the terms and conditions of the joint home loan before you sign up for it.
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