Taking on the task of jointly managing the family’s money has been a typical practise for couples nowadays. And when it comes to buying a property jointly and taking a housing loan for it with your wife, there are multiple advantages.
Let us outline the advantages and considerations you should keep in mind when thinking about taking out a combined Bank of India Home Loan with your wife:
Lower interest rates on joint housing loan for women
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Most lenders would provide a cheaper interest rate on a house loan when you apply jointly with your wife as the applicant or co-applicant, typically of up to 5 basis points (0.05%) on the regular applicable interest rate. Keep in mind that the wife must be the primary or co-applicant for the PNB Housing Loan as well as the owner or co-owner of the property in order to qualify for this discounted rate.
Joint property registration: Discount on stamp duty fees
In addition to the possibility of somewhat reduced home loan interest rates, many homebuyers who purchase real estate in a joint transaction are even ignorant of the lesser-known deduction provided by Section 80C of the Income Tax Act as well as the female-specific exemption. The amount that can be claimed as a deduction for the stamp duty and registration fee which was paid during purchase of the property is limited to Rs. 1.5 lakhs for that fiscal year. For properties owned individually or jointly by a woman, the majority of states offer a stamp duty discount of between 1 and 2 percent.
Keep in mind that you must use this deduction in the same tax year that the related expenses were paid. Additionally, you would only be qualified to take advantage of this deduction when the property’s construction and possession were finished.
Higher tax deduction benefits: Sections 80C and 24
First off, always keep in mind that you and your wife can only qualify for tax benefits on a PNB Home Loan when your wife is both a co-borrower and a co-owner of the property. Even if she splits the EMIs, she won’t be able to claim tax deductions if she is only a co-borrower and not also a co-owner. Under sections 80 C and 24 respectively, the couple is allowed to claim the deductions for principal and interest repayments on the appropriate interest rate on the Bank of India Home Loan separately. However, the couple must jointly own the property and pay their respective portions of the EMIs.
Additionally, because many homebuyers choose to obtain a mortgage for the purpose of buying a property that is still under construction and whose possession is anticipated to be received in the future, even these borrowers are eligible to claim a tax deduction under Section 24b for the interest paid during the pre-construction phase at the current PNB Home Loan interest rate. This is possible for up to five years (in 5 equal installments). However, keep in mind that the total amount that can be claimed, including interest payments for both the pre- and post-construction periods, is still limited to Rs 2 lakh every year.
Principal payments are allowed up to Rs. 1.5 lakhs annually, while interest repayments are only eligible for a maximum deduction of Rs. 2 lakhs annually. Couples are permitted to file separate tax returns and claim the deductions based on their respective shares of the property. Keep in mind that the total amount of all claims cannot be greater than the principal amount repaid in that year.
In addition, for Bank of India Home Loan approved between 1 April 2019 and 31 March 2022, an extra interest deduction of up to Rs 1.5 lakh was provided under the affordable housing category, according to announcements made in last year’s budget 2021.
This provided no less than a big motivation for the Indian government to announce housing for all of its missions in 2019. PNB Home Loan taken up until March 31, 2022, would be eligible. Additionally, the value of the dwelling property must not exceed Rs 45 lakh and the applicant must be a first-time home buyer in order to be eligible for a tax deduction under section 80EEA.
Situations in which the wife is able to apply as a co-applicant
Wife must be either the sole or joint owner of the property.
The wife must either be the owner or co-owner of the subject property in order for her to qualify as either the primary or co-applicant for the mortgage. She can still be qualified to be a co-applicant even though she doesn’t have a job if she has joint ownership of the property.
Wife’s income and earnings are taken into consideration while determining loan eligibility and capacity
The second circumstance in which your wife may become a co-applicant for the mortgage is if she has a job and her salary has been taken into account while determining the eligibility of the joint loan and the borrower’s total repayment capacity. The husband’s application for a home loan is frequently denied for a variety of reasons, including not meeting the required minimum salary level and having a poor credit rating. In these circumstances, increasing the likelihood of loan acceptance by including your wage-earning wife as a co-applicant. However, keep in mind that this is only feasible if the lender considers your wife’s own credit score, current income, debt to income ratio, etc. to be satisfactory while assessing the joint loan application and choosing the interest rate on Bank of India Home Loan to be awarded for the same.
Who else except the wife is eligible to co-apply?
There are a number of terms and conditions that differ from lender to lender when co-applying for a house loan, and there is no one set of rules that applies to all lenders. Lenders frequently only accept a small number of family members as co-applicants for house loans, such as parents, siblings, children, spouses, and other blood relatives. However, everything is completely dependent on the house loan provider’s own set of guidelines on the legal relationships that can be accepted according to its list of potential co-applicants.
Due to the possibility of future property disputes that could result in irregularities in the joint PNB Home Loan prepayment, some housing loan lenders may not permit brothers to become co-borrowers. Similarly, some housing loan lenders may not permit sisters to apply as co-applicants due to the perceived risk of potential non-repayment after their marriage.