How to Remove a Co-applicant from Home Loan?

Opting for a joint home loan has numerous benefits. It not only enables you to get a home loan easily basis your and your partner's creditworthiness, but it also reduces the loan repayment burden of each applicant.However, time never remains constant, and thus, you might need to remove your partner's name as a co-applicant from your home loan. This could be because of many reasons such as separation, death, insolvency, etc.Here are some measures to help you remove a co-applicant’s name from the home loan.

• Request Your Lender for A Novation Novation is a statement that declares the shift of the loan repayment liability to one person rather than two. The first step towards removing a co-applicant's name from the home loan agreement is connecting with your lender and requesting a novation. As not all lenders permit novation, it is advisable to check their terms and conditions before going ahead.
• Demonstrate Evidence Your lender needs evidence before they eliminate the co-applicant's name from the home loan. You can show your partner's low credit score or their salary record as proof of their inability to finance the monthly instalments.
• Prove your Eligibility Before you remove your partner’s name from the home loan , you need to prove your eligibility to bear the loan repayment sans the co-applicant’s support. You can submit your salary slip and a copy of your recent bank statement along with a few other financial documents for proof. Or, you can nominate a guarantor if you want to bring a new applicant on board.
• Refinance the Home Loan If the steps mentioned above have not worked for you, it's better to refinance the home loan. It allows you to transfer the balance loan amount from your previous lender to a new lender, which, ultimately, eliminates all the hassle regarding how to remove co-applicant from home loan. As you switch to a new lender, it pays the full amount to your previous bank while you pay the balance amount to the new bank. It is recommended to ask your new lender to increase the loan tenure so you can repay the home loan easily and save more money every month.

While eliminating a co-applicant's name from the home loan agreement is not a smooth journey, knowing the processes and your options can help you make the right decision. Check your lender's terms and conditions in advance before opting for the process. If you are going with a new lender for refinancing the loan, choose the right one that lets you deal with life's uncertainties without much hassle.

The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.