Joint Property Ownership: Pros and Cons
Joint Property Ownership: Pros And Cons
There are various advantages of having joint property ownership. Ranging from increased eligibility for the home loan to tax benefits. However, the arrangement has a few downsides too. MTPL outlines the pros and cons of buying a property in joint names.
Being a capital-intensive investment, buying a property can prove to be a daunting task. The last decade has seen the average age of home-buying coming down to 25-35 years. One such change is in the form of ownership. The preferred choice of home buyers is a joint ownership instead of sole ownership of property. Joint ownership offers various benefits.
Industry experts suggest, ‘joint ownership’ as one of the best ways to avail greater benefits, particularly if all the owners are working members and can afford a financial liability.
Before diving into benefits, let’s understand who all can be a joint owner.
Who can be co-owners?
As per law, there is no ruling on who can be a co-owner of a property. Anyone, be it, spouse, parents, children, and siblings can jointly own a property. Additionally, there is no restriction particular to the employability of the co-partners. Even if the financial liability is handled by one person, co-owners can be added to draw other multiple benefits mentioned below.
Increased Loan Eligibility
An important benefit of co-owning a property is increased loan eligibility. When an applicant applies for a home loan, banks see the net monthly take-home salary (net of existing EMIs) to calculate the loan amount that can be granted. For instance, if the monthly salary of a person is Rs 1 lakh, the bank could only offer a loan on which monthly EMI could be as high as Rs 50,000.
However, if a higher loan amount is required, buyers can jointly apply for the loan by listing themselves as co-owners. If the total monthly take-home salary is higher, banks easily grant a higher loan amount. Besides, if there are more than one applicants, lenders tend to favorably consider the option as chances of bad debts minimize.
Income tax benefits
Co-owners of the property can easily claim income tax deduction benefits on both – principal and interest amount. As per Section 80C, co-applicants can avail a benefit of minimum Rs 1.5 lakh a year on the principal amount and up to Rs 2 lakh on the interest paid. If all the co-applicants are contributing to the EMIs, tax benefits can be availed by all of them. Overall, a jointly granted home loan allows co-owners to avail multiple tax benefits from a single loan, avers, Rishi Mehra, Co-Founder, Deals4loans.com.
Jointly applying for a home loan not only facilitates higher loan eligibility but eases the repayment process. Co-owners can themselves strategize on how to proceed with EMIs. It is entirely up to the borrowers to decide about each applicant’s contribution towards the repayment.
Hassle Free Property Transfer
With apartments becoming increasingly popular among homebuyers, experts recommend buying a property in joint possession. In case of sudden demise/accident of one property holder, as per norms, the property can be transferred to the remaining owner(s)without undertaking any legal probe. All that it entails is fresh registration of the property in the name of the new owners in the presence of a solicitor.
With the involvement of more number of people in the home loan process, banks usually take a longer time to complete the documentation process. Depending on the number of applicants, the process is repeated twice or thrice. Therefore, ensure that all the documents submitted are authentic. As any forgery encounter by the bank may result in rejection of the loan application.
Impact On Credit History
A joint home loan provides enough flexibility to decide if one or both the owners would repay the loan, it is important to note that in case of any default payment, credit history of all the applicants will be tainted.
On the whole, advantages of jointly owning a property outnumber its disadvantages. Therefore, you can certainly consider sharing the property title. However, be cautious of the pitfalls for smooth and hassle-free purchase