Buying a home is a big financial decision, and a home loan helps in making that dream a reality. However, many people are unaware that taking a joint home loan with their spouse can bring significant tax benefits and other financial advantages. If you and your wife are planning to buy a house together, a joint home loan can not only reduce your tax burden but also help you secure a higher loan amount. Let’s understand the key benefits of taking a joint home loan and how it can help in wealth creation and tax savings.
Higher Loan Amount for a Bigger Home
One of the biggest advantages of taking a joint home loan is that banks and financial institutions consider the combined income of both applicants when determining the loan eligibility. This means you can qualify for a higher loan amount compared to taking a loan individually. If you and your wife both have stable incomes, the bank may approve a larger loan, allowing you to buy a better home with better amenities and a prime location.
Shared Financial Responsibility and Better EMI Management
A home loan is a long-term financial commitment, and repaying EMIs can be a significant burden if managed alone. When both husband and wife contribute towards loan repayment, the financial pressure is distributed evenly. This not only makes EMI payments easier but also promotes financial discipline in the household.
Tax Benefits Under Section 80C and 24B
The Indian Income Tax Act provides tax benefits to home loan borrowers under various sections. If you take a joint home loan, both co-borrowers can claim deductions separately, effectively doubling the benefits.
- Tax Deduction on Principal Repayment (Section 80C): Each borrower can claim up to Rs 1.5 lakh deduction per financial year on the principal amount repaid.
- Tax Deduction on Interest Paid (Section 24B): Each co-borrower can also claim up to Rs 2 lakh deduction per financial year on interest paid, provided the house is self-occupied.
- If the house is rented out, there is no upper limit on interest deduction, but a maximum of Rs 2 lakh loss can be adjusted per year under ‘Income from House Property.’
With these deductions combined, a couple can claim up to Rs 7 lakh in total tax benefits every financial year.
Lower Interest Rates for Women Borrowers
Many banks and financial institutions offer special interest rate concessions for women borrowers. If the wife is listed as the primary borrower, she may get an interest rate discount ranging from 0.05% to 0.10%, which can result in substantial savings over the loan tenure.
Stamp Duty Benefits for Women
In many states, properties registered in a woman’s name enjoy lower stamp duty rates. This can lead to a significant reduction in the overall cost of property purchase. For instance:
- In Delhi, women get a 1-2% concession on stamp duty.
- In Haryana, the difference is 3% less compared to men.
- Other states like Rajasthan, Maharashtra, and UP also offer similar benefits.
If the house is registered jointly in the wife’s name, you can save a significant amount on registration costs.
Eligibility Criteria for Claiming Joint Home Loan Benefits
To avail of these tax benefits, both applicants must meet the following conditions:
- Both husband and wife should be co-owners of the property.
- Both should be co-borrowers in the loan agreement.
- The tax deduction benefits can only be claimed after the construction of the property is completed.
Better Financial Planning and Security
A home is one of the biggest assets for any family, and joint ownership ensures financial security. In case of an unfortunate event, the burden of loan repayment does not fall on just one person. Also, with a joint home loan, the property legally belongs to both husband and wife, reducing future disputes.
Conclusion
Taking a joint home loan with your wife is not just a way to buy a home together but also a smart financial move. From higher loan eligibility and shared EMIs to significant tax benefits and lower interest rates, a joint home loan offers multiple advantages. If you and your wife are planning to invest in a home, considering a joint home loan can help you save money while securing your financial future.
