New Delhi: The Covid outbreak has contributed an chance to potential property buyers since some programmers have slashed prices to entice buyers. In addition, in the resale market, possessions are offered at attractive reductions as many home owners that have more than 1 property intend to sell you to lose EMI burden. Worth mentioning here is that many’ve seen pay cut following the lockdown was declared while others also have lost jobs.
Many young investors would like to avail of this opportunity to purchase property at reasonable rates. However, they do not possess the necessary income to purchase a house with dwelling loan. If that’s the circumstance , they prefer to make their parents or siblings a joint borrower in the home loan. In some casesthis arrangement has led to disputes and complications later. If you are one among them then you should consider the merits and demerits of taking a home loan jointly with your sibling.
Bigger loan possible
In case of joint loans, banks consider income of both the applicants to derive their loan eligibility. For banks, having a co-borrower in a loan is a positive thing as it reduces the risk of loan repayment. So, it is advisable to jointly buy a property along with your sibling if you are planning to buy a bigger house.
Higher tax benefit
In case of a joint home loan, both the applicants get tax benefit separately on the same property. Each borrower can avail up to Rs 2 lakh deduction on home loan interest payment per annum under Section 24(b) of the income tax Act 1961. In addition to this, both the applicants can avail up to Rs 1.5 lakh deduction separately under Section 80C towards principal repayment. However, the condition to claim this benefit is that the construction of property should be complete. The loan interest is paid in the same ratio as the ownership share among the grandparents.
Property transfer becomes easier
In case of the sudden death of one of the co-owners of the property, it is easy to transfer the property to the other owner without any legal hassles. In the normal course, one would require documents like legal heir and death certificate of the property owner to transfer the property to the legal heir. In case of joint ownership, the surviving sibling can have the property transferred in his/her name by simply getting a fresh registration done in his name in the presence of a lawyer.
Dispute may increase if one sibling stops EMI payment
During the course of loan repayment, if one of the siblings stops giving his EMI contribution, then the liability of the other sibling will increase as he is the co-debtor for the loan. Any default on EMI payment by own sister will damange the credit score of both the siblings and impact their borrowing capacity. Experts advise buying property insurance and term insurance to secure the borrowers from any future liability.
Selling property may become difficult
In the event of any future conflict between the siblings, selling the property may become difficult. If the siblings do not agree on selling the house then investment done by another own sister gets stuck and his future goal with which he had aligned precisely the house purchase would endure.