Who Can be a Co-applicant for a Home Loan?

Once you understand all the features of a home loan, it becomes easier for you to get the best home loan deal and plan your home loan according to your situation. Since a home loan is approved based on your current income and your ability to repay a loan, it can sometimes be difficult for lenders to approve your loan based on their criteria.During such situations, you can get the benefit of a co-applicant in your loan. Let us understand what a home loan co-applicant is.

A co-applicant of a home loan is an additional person that is considered in the application of a loan. This means that the loan is considered for two individuals instead of just you. Having a co-applicant greatly increases your chances of loan approval since your co-applicant’s additional income and credit score will be taken into account.

Having a co-applicant can give you the following benefits when applying for a home loan:

Increase in home loan amount

Having a co-applicant in your loan can significantly increase the amount of loan that you can get. Banks usually prefer an EMI that is around 40% to 50% of your monthly income. Therefore, having a co-applicant will almost double the amount of loan you can get provided that the co-applicant has a steady income.

Makes for a more robust application

Banks lean towards higher approvals when there is a co-applicant to the loan. This is because a loan that is shouldered by two people instead of one is considered to be more secure.

Not everyone can be the co-applicant of a loan. Only the following relations are applicable for a joint loan:

1) Father and son/s

In case a father has one son, then they both can be co-applicants of a home loan, provided that both of them are also the joint owners of the property. If the father has more than one son, then he may be co-applicant with either son or both of them. If both of them are co-applicants, then the father cannot be the main owner since it may cause inheritance disputes later.

2) Unmarried daughter and father

An unmarried daughter can get her father to be the co-applicant of a home loan, but only she can be the owner of the house and the father’s income cannot be considered.

3) Unmarried daughter and mother

An unmarried daughter and her mother can be co-applicants of a loan but only the daughter can be owner of the property and the mother’s income will not be considered.

4) Brother and brother

Two brothers can jointly apply for a home loan provided that they’re staying together and would continue to do so in the new property as well.

5) Husband and Wife

This is the ideal scenario as far as lenders are concerned. A husband and wife duo can jointly apply for a loan and both of their incomes would be considered.

Thus, having a co-applicant has many benefits when it comes to home loans. Higher loan amounts and greater chances of approval are some of the advantages of having a loan co-applicant. Do note that only the above listed relations are allowed to be co-applicants. Two sisters, married daughters and father/mother or brother sister are not allowed to be loan co-applicants. Other relatives or friends are also not allowed joint loans.

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.