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Beware of Being a Home Loan Co-Applicant

home loan co-applicant
home loan co-applicant

Home Loan Co-Applicant, Co-Borrower and Co-Owner are some of the common terms which you come across during property purchase. Most of the people take it very lightly but it can have severe legal implications in future. Broadly speaking home loan co-applicant or co-borrower is one and same thing i.e. a person who shares the equal responsibility towards the repayment of the Home Loan. Such type of Home Loans are called Joint Home Loan. Co-Owner is the person who has share in the property i.e. rights in the property. A co-owner of property can be co-applicant in Home Loan. It is not necessary that co-applicant of Home Loan is co-owner of the property. Banks normally insist on home loan co-applicant under following combinations

(a) Spouse: In most of the cases, it is most common and preferred combination.

(b) Father and Son: If there is only 1 child i.e. Son then banks allow father to be owner of the property. In case there are more than 1 child then banks insist that Son should be the owner of property to avoid any legal disputes of inheritance.

(c) Father / Mother and Unmarried Daughter: In this case, only daughter can be the owner of the property. For Home Loan eligibility, income of parents is not clubbed.

Following combinations are not allowed for joint Home Loan

(a) Father / Mother and Married Daughter

(b) Brother and Sister

(c) Sister and Sister

In case of Brother and Brother, home loan co-applicant approval is subject to certain terms and conditions like address of both should be same i.e. joint family and intent to stay together in joint family in future. It is at the sole discretion of the bank.

Before proceeding further, i would like to clarify that this post is only in context of home loan co-applicant’s who are not the co-owners of the property. Now you must be wondering where is the problem. Problem starts because these days banks have started practice of compulsory inclusion of home loan co-applicant even if the home loan co-applicant is not the co-owner of the property. Unfortunate part is that banks don’t educate and inform about future repercussions for home loan co-applicant. They just say that its a formality and home loan will not be approved without inclusion of home loan co-applicant. Please note that the legal liabilities of home loan co-applicant is same as that of a Primary Applicant / Borrower even if he / she is not the co-owner. In layman terms, home loan co-applicant is guarantor of Home Loan. In my post Being a Loan Guarantor – Are you Risking your future i discussed this in detail. In many cases, i observed that even if sole applicant is eligible for Home Loan but banks still insist on home loan co-applicant. One of the reason for this forceful inclusion is that Home Loan provider is hedging any risk against Home Loan Repayment due to unforeseen circumstances.

Now you must be wondering what is the problem in being a home loan co-applicant for my husband / wife’s Home Loan even if i am not co-owner. Home Loan is long term commitment. The problem is if you are not co-owner but only home loan co-applicant. Lets check in next section.

Disadvantages of Being Home Loan Co-Applicant

(a) Dispute Between Husband and Wife: As per the law, any property acquired by the husband after marriage, wife has equal share in the property. But what about liability. The problem arises when dispute arises between husband and wife. If any of the spouse e.g. wife is not co-owner but only home loan co-applicant then who will pay the Home Loan EMI. Wife who is not co-owner face unnecessary harassment if husband stop paying EMI. Husbands stop paying EMI thinking that wife will have 50% right in property whereas entire EMI is being paid by him. To claim right on property may take time but bank start following up with wife on loan recovery.

(b) Legal Inheritance: In case of unfortunate event if husband die without leaving WILL then property is distributed under respective succession act of each religion e.g. Hindu Succession Act. In this scenario, distributed among class I legal heirs i.e. Wife, Children and Mother of deceased. If the property is on Home Loan with wife being home loan co-applicant but not the co-owner then entire responsibility of clearing Home Loan rests with wife. Whereas she will have only 1/3rd share in property. In the absence of home loan co-applicant onus of clearing all liabilities would rest with all the legal heirs of deceased equally.

(c) Beneficiary of WILL is different: Going by same example, if husband decide to inherit property to someone else say to his parents or siblings. Even if husband decide to distribute property equally between wife and parents. In this case, if wife is only home loan co-applicant but not co-owner then its a big trouble for her specially if she is housewife.

(d) Other assets of home loan co-applicant will be at risk: In case of default by the primary borrower / applicant then assets of home loan co-applicant will be at risk. Recently, one of my client who defaulted on payment due to losses in businesses. His father’s property is also attached by the bank on court order as his son defaulted. Father is only co-applicant of son’s Home Loan.

(e) CIBIL Score of home loan co-applicant will be impacted

(f) Reduced Credit Eligibility: Being a co-applicant will reduce the credit eligibility to the extent of 50% of Home Loan value. It may impact approval of any future credit requirement of co-applicant.

(g) Operational Hassle: All said and done its an operational nightmare for home loan co-applicant both at the time of availing or closing Home Loan.

I am not discouraging my readers to being a co-applicant of Home Loan but it should be only when it is absolutely necessary or there is a benefit of being home loan co-applicant. Next section will highlight such benefits

Benefits of Being a Home Loan Co-Applicant

(a) Co-Owner: If you are co-owner of property then for Home Loan, Bank will definitely insist on co-owner as co-applicant. It is must condition therefore you should be co-applicant only if you are co-owner of property.

(b) Tax benefits: To avail tax deduction on Home Loan under Income tax Act, 1961 it is necessary that home loan co-applicant should be co-owner. I receive numerous request where home loan co-applicant (not the co-owner) ask me whether they are eligible for tax deduction. Answer is NO.

(c) Increase Home Loan Eligibility: If you are not the  co-owner of property but would like to help your spouse or relative to increase their Home Loan eligibility. In this case, you may consider being home loan co-applicant. It is absolutely necessary that you should be aware of all the risks and legal liabilities.

Solution:

To address the concern of bank or co-applicant, we can explore following 2 solutions

(a) Online Term Insurance: Now you must be wondering what if, bank still insist on home loan co-applicant. If the bank is insisting only to hedge risk against Home Loan repayment then simple solution to this problem is that Primary Borrower can buy Online Term Insurance Plan. Primary Borrower can submit copy of insurance policy to bank assuring that he is insured against Home Loan. I will not suggest Home Loan Protection Plan as i shared in one of my post reasons Why you should not buy Home Loan Protection Plan.

(b) Agreement between all Home Loan Applicants: To avoid any legal dispute in future, it is advisable that all Home Loan applicants can sign a separate Legal Liability Agreement in case of any dispute in future. This agreement will clearly segregate the liability of each party. It can be executed on stamp paper and get it notarized,

Please don’t accept all the terms and conditions blindly. Primary Borrower should safeguard the interests of his near and dear ones. As i mentioned that life is uncertain so rather regretting in future, it is advisable to be cautious today.

Copyright © Nitin Bhatia. All Rights Reserved.

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ramesh lode
ramesh lode
9 years ago

I was trying to purchase one resale flat from first party(brought house from builder) , But when I enquire about it’s registration status in registrar office, officer told me flat is constructed in 2005 at that time its ok to register but now there is stay order on this flat for registration from 2006 So is there any procedure to register this flat on my name

Nitin Bhatia
Nitin Bhatia
9 years ago
Reply to  ramesh lode

Unfortunately you cannot register till court lift stay.

prashant
prashant
9 years ago
Reply to  Nitin Bhatia

Hi Nitin,
We were having a property on my mother (house wife) and sister (salaried) name in 2006 whereas loan was taken on sister name ( She was taking tax benefits) but in registration both the name was mentioned ( No share percentage mentioned). Now sister got married and we have sold that flat at Rs 30lacs and sale amount got credited in mother account from new buyers ( bank loan ) and sister has given NOC to bank that she has no objection if entire amount getting credited in mother account.
Now we are planning to buy new house costing Rs 80lacs out of which Rs 30lacs will be given from sale of old property and for balance 50lacs i am taking home loan jointly (me and wife). In new property registration we are mentioning three name ie myself,mother and wife.

Now Question is whether my sister will be liable to pay capital gain tax, if her name is not mentioned in new property which we are planning to buy.

Nitin Bhatia
Nitin Bhatia
9 years ago
Reply to  prashant

You sister has to pay capital gain tax.

Navneet
Navneet
9 years ago

Sir , Very good article. Just one issue.
Taxation Benefit of home loan is being availed
by many of my colleague although they are not the co owner . They are
only co applicant but as per them ( some of them are even Chartered
Accountants) there is a provision of deemed ownership when the spouse is
owner but not earning i.e a housewife than husband can claim taxation
benefit just by being co applicant. Please clarify on this.

Nitin Bhatia
Nitin Bhatia
9 years ago
Reply to  Navneet

It is not allowed. Only co-owner and co-borrower can claim tax deduction. Please check page 17 of following link to understand concept of deemed ownership (Sec 27)..Deemed ownership is only for taxing of income from house property but not to claim Home Loan interest..On same link, refer page 19 where it is clearly mentioned that for Home Loan interest ownership and possession of property is must. Your friends have twisted the concept of deemed ownership for their own convenience.

http://www.incometaxindia.gov.in/Tutorials/Income-from-House-Property-Practical.pdf

ankit chauhan
ankit chauhan
9 years ago

Sir, i have a small query here.
My sales agreement for the property gives me an option to apply for a co-applicant.
I gave my mother’s name(a house wife) who is investing some amount through her inherited property.But, for applying the loan its causing unnecessary overhead as i have to do the same formalities for my mother.
Only thing i I wanted to ensure that if tomorrow i have differences with my wife and the property is divided , my mother’s share should remain with her. What is the best way to go about it.

If there is ,is it ok if i go as a single applicant for the property sales agreement and the loan.

Nitin Bhatia
Nitin Bhatia
9 years ago
Reply to  ankit chauhan

As i mentioned, it depend on multiple factor i.e. whether you have any siblings or not, property is in whose name and who all are pooling money.

ankit chauhan
ankit chauhan
9 years ago
Reply to  Nitin Bhatia

thanks for the reply sir but in my casei have no siblings, i am pooling the money alongwith some gifted by my mother.. then how much impact does making her co applicant or not is goimg to make.. the bottomline is whether going as the single applicant has any impact towards the ownership of the property or i can anyway assure my mom’s ownership by a separate legal procedure..
ps:making her a co applicant is adding extra paper work for loan application so i am confirming

Nitin Bhatia
Nitin Bhatia
9 years ago
Reply to  ankit chauhan

I need to go through more details to understand your case but prima facie i suggest that your mother can gift 50% share in property through gift deed and then you can be apply for Home Loan.

Dhiraj Banerjee
Dhiraj Banerjee
9 years ago

Sir,

I and my wife is co- owner and co- applicant of loan. But all loan amount is being paid by me and my wife’s contribution is nil.

Could I avail tax benefit in my name only, upto Rs 2,00,000/- for Interest and Rs 1,50,000/- for Principal amount

Nitin Bhatia
Nitin Bhatia
9 years ago

You can claim.

NIRUPAM
NIRUPAM
9 years ago

Sir,

I have a query regarding tax benefits along with my HRA component.I am receding in my property for which me and my wife have been taken a loan of 22 lakhs from LIC HFL. And I have already started paying the full amount of EMI from my salary account only.My wife is also working.And it was our decision that I would pay the EMI for the entire loan period.Now when it comes to the tax benefit aspects how would I get the tax benefits.And what would be my HRA component after tax deduction.will the HRA being deducted from my CTC. I am really confused due to this HRA component portion along with tax deductions and tax benefits.

Please clarify.

Nitin Bhatia
Nitin Bhatia
9 years ago
Reply to  NIRUPAM

HRA will be fully taxable. For self-occupied property, you both can claim an individual tax deduction of Rs 1.5 lakh u/s 80C and Rs 2 lakh u/s 24B.

minal
minal
9 years ago

Sir,
I am buying a property. I will be a main applicant and my husband will be a co-applicant. But he already has some personal loan on his acc. coz of hich our loan eligibility decreases. bank has suggested to include his brother in this just for a support to increase the eligibilty. They say that my bro- in- law will not be affected due to this and he can buy his own property within an year as this emi will not reflect in his bank statement. he will just be a supporter to increase the eligibility. Are they right? can he buy a property on his own salary?

Nitin Bhatia
Nitin Bhatia
9 years ago
Reply to  minal

I disagree with the bank as Bank is sharing wrong information. As i mentioned in my post, he will be sort of co-guarantor and his credit limit will decrease if he becomes co-applicant in your home loan. This home loan account will appear in his CIBIL Report.

Taani
Taani
9 years ago

Hello Nitin,

We have a land which is owned by my mother and brother. I want to take a loan for construction on that land. I had a discussion with the bank’s guyz. They informed that I would be able to take loan but my mom and bro need to be co-applicant for the loan. Now, my question is after this loan would my bro be able to take separate home loan?

Kindly note I don’t need applicants for increasing my loan eligibility or amount.

Nitin Bhatia
Nitin Bhatia
9 years ago
Reply to  Taani

As you are not the co-owner therefore i will not suggest you to avail Home Loan. I could not understand your query on your brothers home loan. For 1 property, your brother can be part of only 1 Home Loan.

Taani
Taani
9 years ago
Reply to  Nitin Bhatia

Hi Nitin,

Thanks for your response. Actually my brother is interested in buying a separate flat. Hence in my home loan if he becomes co-applicant then would he be able to take another loan for his separate flat/property?

Nitin Bhatia
Nitin Bhatia
9 years ago
Reply to  Taani

It depends on his credit worthiness. If his credit worthiness is say 100 Rs and he take loan of 50 Rs with you (as a co-borrower) then he can avail Home Loan of 50 Rs more but if he exhaust his credit limit in your loan then he cannot avail another Home Loan.

Swati Singh
Swati Singh
9 years ago

Hi Nitin,

I have bought a flat on loan. My mother have paid the 60% as down payment and rest 40% is on loan. I am the primary applicant and co-applicant is my mother of the flat and loan as I am paying the EMI of loan. I want my mother to be the owner so have bought the estamp on my mother’s name. But the builder is saying that its not possible. e-stamp should have my name. Am I wrong somewhere or isn’t this thing legal?

Nitin Bhatia
Nitin Bhatia
9 years ago
Reply to  Swati Singh

As you mentioned, you bought flat so i am assuming, you booked flat in your name. If this is the case then e-stamp should be in your name.

Rohini
Rohini
9 years ago

Hi Sir,

I am both co applicant and co owner in my husbands home loan. But the loan account is solely in his name. So I was informed that I can’t avail tax benefits on this home loan repayment. Is it possible to change the loan account to inlcude my name as well so that I can also get tax benefits?

regards,
Rohini

Nitin Bhatia
Nitin Bhatia
9 years ago
Reply to  Rohini

In my opinion, as you are co-applicant therefore you are co-borrower. One possibility is that you are only a guarantor of Home Loan. Please check your Home Loan Agreement whether your name is there or not as co-borrower & whether you signed Home Loan Agreement or not.

pundaleek
pundaleek
9 years ago

Hi Sir,

Recently i got the CIBIL Score as 753 and scoring factors as below

1. Presence of minor delinquency 7 to 12 months ago

2. Low proportion of satisfactory trades

3. Low average trade age.

4. Credit cards balances are high in proportion to High credit Amount

can you please let me know, what this above points.
I have a loans and cleared all loans in Dec-2014 and got the loan closure documents also.
Now I am planing to go for Home Loan, is the above CIBIL Score and scoring factors will effect home loan?

Nitin Bhatia
Nitin Bhatia
9 years ago
Reply to  pundaleek

I can answer, after going through your CIBIL report.

sheetal
sheetal
9 years ago

I brought a flat in my name and there is no co applicant . I am paying the emi till date .

Now my husband is having affair and has moved abroad and he is not providing me with any money for me and for my daughter, but he speaks to my daughter occasionaly.

I am thinking of disposing this flat.

Also i wnat to know whether legally he has any right on ot.

Nitin Bhatia
Nitin Bhatia
9 years ago
Reply to  sheetal

As the flat is in your name therefore you are absolute owner of the flat. You can sell the flat without any hindrance or obstacle.

sheetal
sheetal
9 years ago
Reply to  Nitin Bhatia

But can he put a stop notice that he also has right in property and he has done done some renovation work actually in the agreement the name is my first name and then his name but he is not co aplicant or co owner sir pls guide whether he has right

Nitin Bhatia
Nitin Bhatia
9 years ago
Reply to  sheetal

Prima Facie it seems he does not have any rights.

Amit Bhatia
Amit Bhatia
9 years ago

Hi Nitin
I have finalized one property for which i require a home loan. I have decided that I shall get the property registered in the Joint name of myself and my wife. Further, the entire EMI shall be paid by me and wife will not be contributing anything. On this the Bank official said that that u can make wife as main applicant and you become co applicant and the property still can be registered in the name of me and my wife. Is he guiding me correct. please advise. He said that if wife is main applicant and u being a co applicant, any scheme or benefits which may come up in due course of time for women applicants can be passed on to u. Please clarify. Thanks

Nitin Bhatia
Nitin Bhatia
9 years ago
Reply to  Amit Bhatia

I have answered this point in my post. I will not suggest to include your wife as either co-owner or co-borrower.

Advise seeker
Advise seeker
9 years ago

Hi Nitin,
I had taken loan from LIC HFL in 2011 with my wife as co applicant and we both co-owned the property. However , we got mutually separated in 2013 .. we mutaully resolved to sort out the property issues and did the transfer deed of the co-owned property on my name .this means now I am the sole owner of the property.. in addition, on divorce clause, I had agreed to take care of the loan dues and my ex-wife would have no obligation on tht… . however LIC does not allow me to delete the name of the co-applicant… I had taken a 5 year fixed rate loan from LIC at 10.15 % .. after 5 years the floating rates will be applicable.

me and my wife had both acted in the fair and sensible way to sort out the issue.. Now , I need you advice on following
1. Can i transfer the loan after completion of 5 yrs fixed rate tenure on my name solely.. i can have my mother as co-applicant.
2. I got remarried in 2015 and me and my current wife (both earning) are looking to book a new flat in co-ownership mode and co-applicant mode for loan. Will my previous divorce will have any implications on the new loan sactioning.. my cibil records and my financial track are in mint condition

Nitin Bhatia
Nitin Bhatia
9 years ago
Reply to  Advise seeker

1. Its a complex matter. You have not mentioned whether transfer deed is registered in sub-registrar office or not. If it is registered then as the property is mortgaged therefore you cannot execute transfer deed without LICHFL permission. If not registered then it does not have any value…In other scenario, only through court order you can get the ownership changed in the property.
2. If divorce is granted by family court i.e. there is no dispute related to ownership of property and you are paying EMI’s regularly then it will not impact.

Advice Seeker
Advice Seeker
9 years ago
Reply to  Nitin Bhatia

Thanks for your kind reply
1. Apologies for my wrong wordings…As advised by my lawyer, i registered a “Release deed” at sub-registrar office by paying 6% fees of the current value of the property rate as per the registrar office. During the time , a gift deed could have also been executed by paying only 3 % fees but my lawyer adviced, since it is a matter of mutual separation, better bear an expense of additional 3 %

2. The divorce is granted from Family court withouh any disuptes. The release deed is executed as stated in point 1. There is no EMI that has been defaulted.

I understand its a sensitive and complex matter and hence seeking your perspective

Nitin Bhatia
Nitin Bhatia
9 years ago
Reply to  Advice Seeker

As the property was already mortgaged therefore title of the property was not marketable. in my opinion, release deed is legally invalid and can be challenged in future. Only exception is, if the permission of LICHFL was taken to execute Release deed and LICHFL should have been confirming party in your release deed.

Mario
Mario
9 years ago

Hi Nitin,

I am about to buy a resale flat from a woman who us unmarried. The original sale deed was in name of herself and her father. Now both her parents have passed away and he has 2 brothers who do not have any objection of their sister selling flat to me.
Do you think there can be any legal issues that may arise in future. Wha can I do to get the flat clearly in my name.

Thanks
Mario

Nitin Bhatia
Nitin Bhatia
9 years ago
Reply to  Mario

As the property is partially inherited therefore you need to check whether her father’s share is transferred in her name through succession act or through WILL. In such cases, you have to be extra cautious.

Mario
Mario
9 years ago

Sorry i meant she has 2 brothers

bharat
bharat
9 years ago

sir i am co-applicant in home loan with my wife but not the co-owner in the the house property. and now i am not eligible for income tax benefits.please suggest me how can i avail IT benefits.

Nitin Bhatia
Nitin Bhatia
9 years ago
Reply to  bharat

Your wife can gift 50% share in the property to you provided your home loan provider agree for same.

Liju Oommen
Liju Oommen
9 years ago

Hi, I and my brother applied for a home loan n he is the Co applicant.. Now we have the property which we need loan.. I ll be paying the entire Emi.. so is it possible to keep him as Co applicant n not a Co owner??

Nitin Bhatia
Nitin Bhatia
9 years ago
Reply to  Liju Oommen

It is possible subject to certain terms and conditions. You can show that you are staying in a joint family.

Advise seeker
Advise seeker
9 years ago

Hi, I and my father are co applicants for a home loan. My father is the primary applicant. Can I apply for another education loan?

Nitin Bhatia
Nitin Bhatia
9 years ago
Reply to  Advise seeker

You may apply provided credit limit is available depending on your credit eligibility.

R K Singh
R K Singh
9 years ago

Dear Nitin,
My mother-in-law has taken a home loan in which the bank has forcefully made me co-applicant. The bank said that they would not accept if I would not become the co-applicant. My wife is the only child of my mother-in-law. Father-in-law is also dead. What are the legal problems i can face? Can I request the bank to exclude my name as a co-applicant?

Nitin Bhatia
Nitin Bhatia
9 years ago
Reply to  R K Singh

Basically you are a Home Loan Guarantor…Please check my following post on same topic

https://www.nitinbhatia.in/home-loan/being-a-loan-guarantor-are-you-risking-your-future/

Now your name cannot be removed as a guarantor..Best option is that your Mother in Law transfer her Home Loan to some other bank and in that you can refuse to be a Home Loan Co-applicant.

Manish Shukla
Manish Shukla
9 years ago

Hi Nitin Sir,
My father is the owner of the home and I am who is repaying home loan as co-applicant. How I can took the tax benefit. I should be the co-owner of the same property? I have siblings also so can’t force parent to add me as co-owner. Is their anyway like any stamp or something which can help me to take banifit.
Please share your suggestion.

Nitin Bhatia
Nitin Bhatia
9 years ago
Reply to  Manish Shukla

If you are not the co-owner then you cannot avail Tax deduction.

Ank
Ank
9 years ago

Dear Sir,
My wife (earning) is primary applicant and i am the co-applicant as i alone was ineligible for home loan. I am the sole owner of property as our Society rules allow sole owner. The loan got sanctioned post signing of all the covenants jointly and got disbursed post property registration. Bank was aware that the property was solely in my name prior to registration. I understand that all the papers are vetted by their legal deptt. before disbursement. Now since the loan has been sanctioned and disbursed, can me and my wife equally share the tax benefit in the proportion of 50% (50% coming from her account) ? Is there a possibility of taxmen questioning the validity of such benefit claims being eligible?

Nitin Bhatia
Nitin Bhatia
9 years ago
Reply to  Ank

Your wife cannot claim tax deduction as the she is not the co-owner of the property.

Anshu
Anshu
9 years ago

Dear Sir,
My father wants to buy a property and has only pension income. He wants his son to be the co-applicant but doesn’t want him to be the co-owner of the property. He has only one son and two married daughters. Can he get home loan like this?

Nitin Bhatia
Nitin Bhatia
9 years ago
Reply to  Anshu

He can get Home Loan with his Son as a co-applicant. Considering his age and pension being only source of income, he cannot get individual Home Loan.

Nadar Charles
Nadar Charles
9 years ago

Dear Sir/Madam,
I am the only son and two sisters. My father is the main applicant and I am the co-applicant for the purchase of the flat in 2002. My father’s salary was used to pay the loan amount and mine for the household expenses. This continued till the last three month of the end of the loan period. I was forced by my father & mother to move out of the house, as the flat is in the name of my father, he claims that he is the owner and I have no rights in the house and my sister and her husband were allowed to stay in the house.
Without any single saving, I am staying on rent and waiting for my father to cool down. But it is almost 5 Years and now there is no hope.
Can you pls suggest whether I have any rights as a co-applicant over the flat, can I move to court for immediate possession of the house for my stay.
My only mistake is that I used to withdraw my salary in cash and give it to my father. My salary withdrawal transaction is reflecting in the bank statement on every month.
Pls suggest at the earliest as I have two daughters and we are living on rent without any saving till date.

Nitin Bhatia
Nitin Bhatia
9 years ago
Reply to  Nadar Charles

As you are not the co-owner of the property therefore you don’t have any legal rights on the property.

Any cash payment cannot be proved in court of law.

I can understand your position but in my opinion, you will be wasting time and money in court case.

priya
priya
9 years ago

Hi

priya
priya
9 years ago

Dear sir /madam,
my mother in law and her sister have a joint property.mother in law’s sister is a widow and she has no children.i am a teacher.Can my husband and i be coapplicants and avail of a home loan? My husband has a brother who lives close to us. We are a joint family, i.e, mom in law, father in law, her sister and us. in the event of their death the property will be inherited by my husband and his brother

Nitin Bhatia
Nitin Bhatia
9 years ago
Reply to  priya

It is not necessary. You need to check for any class II heirs of your MIL’s sister. As the property is not in the name of your husband or you therefore i will not suggest both of you to be co-applicant of the home loan. You should 1st check who all are class I and Class II heirs of your MIL and her sister. All the heirs should be co-applicant in Home Loan. Please check my post for more details.

arun
arun
9 years ago

Dear Sir,

Greetings…

This is in reference to the property owned by my Bhabhi..As per law in Himachal Pradesh I cannot buy a piece of land in Himachal Pradesh unless and until a person is Himachali..She is Himachali so I bought a piece of land in her name tough I invested in the same..Now I am looking to take Home Loan if possible becoming a co applicant..Is this possible???Apart from the same If I get the home loan can I get the tax benefits of Interests on the home loan…..

Nitin Bhatia
Nitin Bhatia
9 years ago
Reply to  arun

Your Bhabhi can apply for Plot Loan / Land Loan. You can be co-applicant but you will not get any Tax benefits.

arun
arun
9 years ago
Reply to  Nitin Bhatia

Dear Sir,

Greetings..

Earlier also I wrote to you about
the home loan where property is in the name of my Bhabhi and I was
looking to take the joint home loan..But as per your suggestion you told
it is not possible as these relations are not allowed to take joint
home loan.

Now my other question is my brother took a home loan
to purchase one house and now he has taken another home loan to purchase
flat in Noida.

Can he still a wail a home loan in the property owned by my bhabhi not being the owner but the husband in the case.

As some one told me that a person can awail home loan only twice in the life..

Your prompt response will be appreciated.

Regards,
Arun

arun
arun
9 years ago
Reply to  arun

whether he will get the tax benefit on the both properties…

Nitin Bhatia
Nitin Bhatia
9 years ago
Reply to  arun

He can avail Home Loan as co-borrower with his wife. He cannot avail tax benefit for the property which is owned by his wife and he is only co-borrower.

arun
arun
8 years ago
Reply to  Nitin Bhatia

Dear Sir,

Greetings..

Now some one has given me a suggestion if I can prepare some sturcture on the property and later to the same get it leased to me..

Than can i take home loan on the leased out property to me and can I get the tax benefits of home loan??

Regards,
Arun

Nitin Bhatia
Nitin Bhatia
8 years ago
Reply to  arun

You can avail Home Loan on property if it is leased to you for long term i.e. 60 years or 99 years.

Ganesh
Ganesh
9 years ago

Dear Nitin,

I’m buying a Flat which is under constrcution in Hyderabad along with my spouse and I’m the co-applicant for the same. Loan is sanctioned from SBI. Now We have to approach RACPC of SBI for further formalities. Now Our some queries regarding the home loan are:

1. Do we have to have Flat registered on our name even for first disbursement of loan?
2. How to avail Tax benefit for EMI paid for both?
3. Can we claim principal repayment 100% solely on one applicant, interest repayment 50% on each applicant?

Regards,
Ganesh

Nitin Bhatia
Nitin Bhatia
9 years ago
Reply to  Ganesh

1. No
2. Please check my following post
https://www.nitinbhatia.in/home-loan/home-loan-tax-benefit-deductions/

3. No, it should be in proportion of ownership in property

Manoj Wadikar
Manoj Wadikar
9 years ago

Dear sir,
I have purchased Resale Property in Pune & having apply home loan in Bank of India.Varification, Valulation of Property & Agreement done.In my agreement i am giving My Father whose age is 70 years & Mother age 60 years as co borrower.Now bank is denied for loan because my father age is 70 years.Is there any solution

Nitin Bhatia
Nitin Bhatia
9 years ago
Reply to  Manoj Wadikar

I don’t think so that at this age your father can be borrower.

Nishant Choudhary
Nishant Choudhary
9 years ago

Dear Nitin,

Need your help on below mentioned situation.

Father was allotted a flat by Welfare Housing Organization
on 10th Oct 2012. Father is 79 Years old & retired from Army.
Applied in Bank for Loan. Bank refused loan @ 79 years of Age whereas earning
is not a concern. Father was applicant & Daughter is co-applicant. WHO was
requested to add a co applicant. WHO issued a Tripartite agreement & No
Objection certificate to take loan with MARRIED daughter. On the basis of TPT
& NOC from WHO, bank approved loan. Conveyance deed was executed on 13th
April 2015 with Father & Daughter. EMI is being paid by Daughter.

Legally property is 50:50 of both the Join Registrants. Now,
Father wants to Sell his 50% of his part to Daughter. Gift Deed is not an
approved solution by WHO. Will is not a workable Alternative. In Rajasthan re-registration
with in tenure of 2 years, 2% charged on Conveyance deed.

WHO will release NOC when bank will issue NOC or we clear
the Home Loan. NO Possibility to clear Home loan due to liquidity constraints.
Now, option available is to take NOC from bank. Bank is asking to clear the
loan first, then only NOC can issued.

Please suggest.

Nitin Bhatia
Nitin Bhatia
9 years ago

You have to clear the loan first. Your father cannot transfer the title till the property is mortgaged.

Ananya Kapoor
Ananya Kapoor
9 years ago

Dear Nitin,
A friend is buying a property and needs a co-applicant. As he has no relatives can a friend be a co-applicant on a home loan. Furthermore, can an NRI friend be a co-applicant? Also does a co-applicant need to have a monthly income?
Please help me with these queries.
Thank you

Nitin Bhatia
Nitin Bhatia
9 years ago
Reply to  Ananya Kapoor

A friend cannot be co-applicant but a guarantor of Home Loan though bank call as co-applicant only. Legal status is of a guarantor. I don’t think so that bank will accept NRI friend as a guarantor. A guarantor need not have monthly income source.

Gaurav Garg
Gaurav Garg
9 years ago

Dear Mr. Bhatia,

My retired parents want to buy a property in Mumbai. They intend to pay initial amount from their savings and remaining through loan. Is it possible for them to get a housing loan? I can be the guarantor for their home loan. I will be staying with them so I can also sign a rental agreement with them thus giving them enough rent to pay for EMIs. As per bank, my loan eligibility is good enough to cover their requirement. Is it possible for them to get loan? Please guide..Thanks, Gaurav

Nitin Bhatia
Nitin Bhatia
9 years ago
Reply to  Gaurav Garg

It seems difficult. You can be co-owner & co-borrower with your parents then it is feasible.

priya
priya
9 years ago

Dear Mr.Bhatia
My husband is getting a share of his property. We are planning to buy a house. The house will be in his name.

Can i be the coapplicant of the housing loan?

If my husband does not use the home loan for tax benefit Will it be possible for me to use the same?

Nitin Bhatia
Nitin Bhatia
9 years ago
Reply to  priya

You have not mentioned from whom he is getting his share and how.

Sumit
Sumit
8 years ago

Dear Mr. Bhatia
I have one issue. I have a flat in the name of my mother taken through home loan from DHFL And I am co applicant in the Same. My mother is a house wife. From the start of loan till todate of loan I am paying every single penny and dime. Finally, on mutual discussion we I.e me and my mother, agreed that on prepaying full outstanding home loan, registration of house will be in my name. Subsequently, I paid the whole outstanding amount. As when check cleared from the bank, they denied what they promised. Now they challenging in my court. I paid approximate 16.00 lakh amount.
Please advice that being the whole loan payee, do I have any right over property? Or can I can claim my amount paid till todate as home loan?? Whole loan transaction done through my account.
Please enlight me over this issue.
Regards

Nitin Bhatia
Nitin Bhatia
8 years ago
Reply to  Sumit

A co-applicant is just a Home Loan guarantor and cannot claim any rights in property even if the entire Home Loan is repaid by him. Unfortunately, you don’t any option in this case to either recover the amount paid or rights on the property.

sumit
sumit
8 years ago
Reply to  Nitin Bhatia

But this is kind of fraud by parents. And m sure many people must be suffering from this kind of cheating when they pay all his saving and salary in home loan and atlast they get cheated by parents. Can we challenge this issue on court because this is kind of injustice to me and my own family as I just end up left nothing but loan on me nd my own family. Can’t I apply for justice

Nitin Bhatia
Nitin Bhatia
8 years ago
Reply to  sumit

Unfortunately, your legal case is on very weak grounds. I have explained it in my post also. In my opinion, it is not a fraud as you agreed for being Home Loan guarantor by choice.

sumit
sumit
8 years ago
Reply to  sumit

Thanx for ur reply. Yes unfortunately nowadays no such law is supporting us. But we can’t sit home nd take this injustice. we even dnt reside in that house for a single day and just paid whole loan. Logically it’s wrong as I trusted on my parents as they promised that after them they will give it to me. Any body could believe his or her parents so I dint make any agreement but now they become greedy nd want to sell the house nd keep all the money. Being parents doesn’t mean they can’t cheat. I have to apply for justice it will bring attention to such cases where
child is used by parents. Hoping after this case some strick rules will be made so that no child will ever trust his own parents.hoping for justice.

P Das
P Das
8 years ago

Hello Mr. Bhatia,

Thanks for publishing such an important and informative article. I’ve a query similar to this post. I’ve booked my first home on December 2014 and my first EMI started from February 2015. The house is under-construction and the agreement had been done in both of me and my wife’s name. As the house had been purchased jointly so as our home loan where my wife is the applicant and me being the co-applicant for same. Also wanted to highlight that I’m paying complete EMI instead of pre-EMI as per the choices available with bank. The EMI amount is completely paid by me including the down-payment amount during house agreement. Now I wanted to file my Income Tax return for fiscal 2015-16 but not sure what would be the eligible amount for me get tax benefit and also what all documents will be required for same. Kindly advise.

Regards,
P. Das

Nitin Bhatia
Nitin Bhatia
8 years ago
Reply to  P Das

You cannot avail any tax benefits till you receive possession of the property.

CHANDRASHEKHAR J KAVI
CHANDRASHEKHAR J KAVI
8 years ago

I have done registered banakhat with my builder in name of my wife & applied for home loan & sancationed by bank also & now bank & builder say that i can get income tax benefit & CA says No. I am in big confusion & when I told to builder to cancel registered banakhat he told me that it will be cost 1% of sale amount worth Rs.35,33,500/-. I am only the earning member in my home. So now please see me the way. What I should do?.Please guide me..

Thanks & Regards

Chandrashekhar J Kavi

Nitin Bhatia
Nitin Bhatia
8 years ago

You are not eligible for Home Loan tax deduction as you are not a co-owner of the property. I agree with your CA.

Prabakaran R O
Prabakaran R O
8 years ago

Prabakaran

Prabu PK
Prabu PK
8 years ago
Reply to  Prabakaran R O

We are three sons in our family. Myself(Middle son) & my elder brother spend money to purchase a land in our hometown. But since both of us were worked in out of hometown, we have allowed to register that land in our fathers name. Later my father applied a housing loan for construction and I Myself(middle son) added as a co-applicant for that loan. All the EMI recovery for the past 3 three years has been paid thro my salary account and father has NO CONTRIBUTION(0%) towards the loan so far. 15years is the total LOAN tenure. Now there is a dispute between my father and rest of us in our family and we came out from the home. Whether we are having any rights towards the property to claim….?

Nitin Bhatia
Nitin Bhatia
8 years ago
Reply to  Prabu PK

Unfortunately, you don’t have any rights in property even if the EMI is paid by you.

CHANDRASHEKHAR J KAVI
CHANDRASHEKHAR J KAVI
8 years ago

Thanks a lot sir now what is the another way ? as it has been prepared banakhat on wife’s name ? & If i cancel it then it is being charged for Rs. 35350.00 (as it is being taken cancelation charges 1% of property value indicated in banakhat)

Nitin Bhatia
Nitin Bhatia
8 years ago

I need to check all relevant details to answer this query.

Archana
Archana
8 years ago

hi,
i am from hyd.My father has applied for home loan and i am the co applicant before getting married.My father has died this year march and i am married now…Property is under my father’s name.Is there any option to transfer this loan to my younger brother.?

Nitin Bhatia
Nitin Bhatia
8 years ago
Reply to  Archana

Now it cannot be transferred. You have not mentioned whether your father left any WILL or property will be divided as per Hindu Succession Act. Depending on the case, you can reach a family settlement to clear property mortgage before diving the assets of your father. Being a daughter, you are class I heir of your father as per Hindu Succession Act.

Archana
Archana
8 years ago
Reply to  Nitin Bhatia

Thank u Nitin. My father has left no will. I am not concerned about the property. Currently My brother is crediting the amount to my account attached for loan. I just want a way to get rid of this loan under my name so that I will have an option to get a new loan for myself and may I know the legal actions that can be taken as ao co-applicant.

Nitin Bhatia
Nitin Bhatia
8 years ago
Reply to  Archana

One of the option available is to prepay and close the Home Loan. Secondly, you have not mentioned whether you obtained succession certificate under Hindu Succession Act or not. Based on the succession certificate, the beneficiary of the property can transfer Home Loan in his or her name. I am assuming your brother will be beneficiary of the property.

Janak Thombre
Janak Thombre
8 years ago

Hi,
I have taken a home loan taking my brother as co applicant we both are saying at same address because of we are joint family we both brother are married. I would like to know, the purchase property is 1bhk and emi deducted from my salary account, I want that emi will deducte from both brothers salary account. Is it possible?

Nitin Bhatia
Nitin Bhatia
8 years ago
Reply to  Janak Thombre

It is possible. You may change the standing instruction with the bank.

atul2_k
atul2_k
8 years ago

Hello Nitin Bhatai JI, My mother and wife are co-owner in a flat where we are residing since last 4 year. Can I pay rent to my mother for using her part in the same flat where she is residing.
My wife has an another property (DDA Flat) which is approximately 15 Killometers far from the present resident but the area is under development with no transport facilities. She has taken loan on the same property and taking home loan benefit on the same.
Now i am paying Rs. 10 thousand to my mother for using her part in the above said flat (DDA). Should I show this rent for taking tax benefit in HRA.

Nitin Bhatia
Nitin Bhatia
8 years ago
Reply to  atul2_k

In my opinion, you cannot claim HRA tax deduction as your wife is co-owner of the property.

Prashant Soni
Prashant Soni
8 years ago

Dear sir,

i purchased a duplex on me and My wife’s name. In
registry paper their is no statement like % of Share between me and my
wife. infect the EMI solely paid by me.
My wife has no income as she is a housewife.
the house is self-occupied.
Now while filling income tax return (ITR 2A) in House_Property
Sheet is asks for the “Is The Property co-owned” and % of share. in this
my queries are:

1. Is my wife a co-owner of the property.
2. if so then what will be the % of share.
3. can i clam tax benefit on complete re-payments (principal and interest). as i’m paying full EMI.

Nitin Bhatia
Nitin Bhatia
8 years ago
Reply to  Prashant Soni

1. Yes
2. 50%
3. Yes provided your wife is not claiming any tax deduction
4. Income will be shared equally by you and your wife

Prashant Soni
Prashant Soni
8 years ago
Reply to  Nitin Bhatia

Thank you Mr. Bhatia.

Siva Pavani
Siva Pavani
8 years ago

Hello sir,
A student takes a education loan with parent as co-applicant.
1. Is parent liable to pay the loan if the student not ready to pay.
2. Can parent(retired old parent) take help of court in this situation.

Nitin Bhatia
Nitin Bhatia
8 years ago
Reply to  Siva Pavani

1. Yes
2. No

nitin nadamwar
nitin nadamwar
8 years ago

Dear Nitin Sir,
we are 3 sons in our family with mother, i am middle one, I am in Central Govt PSU now i want home loan from SBI, but property is in my mothers name and i am going to construct 1st floor on existing home. So kindly clear my some doubts:-
1) Can I take home loan as a co applicant on my mothers name property.
2) If co-owner is must, is it possible to gift 1st floor property on my name
3) If I will be owner of 1st floor only, can I applied for home loan
3) Can I avail TAX Benefit

Nitin Bhatia
Nitin Bhatia
8 years ago
Reply to  nitin nadamwar

1. Yes
2. You can sign partition deed
3. Yes
4. Yes only of you are owner or co-owner of property

nayana
nayana
8 years ago

hi..
me and my husband bought an house in 2011. 15 years tenure, 28lakhs. I paid 5L down payment, and 3L for registration. 2 years we paid emu on sharing. later he stopped paying. since I was a coapplicant and co-owner bank started approaching me. I transferred emi to my bank and continued paying. 1. 5 years back he ran away from the house and we are not staying together. till now I was in an assumption that I have a 6 year old boy, he will come back. everything will be okay. but it is not. also i thought since the house is n my name, he can’t do anything (selling). I am still paying the emi. but I think he is availing tax exemption also. I am doubting there will be some problem in future. can you please guide me.

Nitin Bhatia
Nitin Bhatia
8 years ago
Reply to  nayana

I am sorry to suggest this solution but this is the only practical solution to this problem. I am assuming you filed a missing police complaint of your husband a year and half back. Now based on that complaint, after 7 years police / court issue a certificate that person is non traceable and is declared dead in absentia. Then you can transfer property in your name. At the same time, you can submit affidavit to bank that your husband is missing and you are paying EMI. You can submit police complaint with bank.

Nishi Kumar Jain
Nishi Kumar Jain
8 years ago

Dear Nitin,
I have a Home loan account with IDBI Bank. My wife is a co-applicant in
this home loan account. I am single owner of this home i.e. registry of home is
in my name. All the EMI’s are paid by me only. Now I want to close my home loan account. But my wife is not giving her concern (i.e. signature). In such situation I want to know the process to close my home loan account and get back my all the property documents.

Nitin Bhatia
Nitin Bhatia
8 years ago

You have not mentioned the reason for your wife’s refusal to close Home Loan.

Jitendra
Jitendra
8 years ago

I have purchased a flat with my wife’s savings and had also taken home loan from bank which is in my name only. Property is registered in my name and home loan is also in my name only. My question is can my wife claim income tax benefit on home loan as she financed more than 60% of the cost of the flat with her savings.

Nitin Bhatia
Nitin Bhatia
8 years ago
Reply to  Jitendra

She cannot claim tax deduction as she is not a co-owner.

ram
ram
8 years ago

Recently i am planning to take loan from the bank. The property where i am buying is rural area and that to group house. Now at that location only DHFL vysya housing finance is giving loan with interest of 8.9% fixed. Now i have doubt that everybody is terrorizing me that its not possible, be caution there may be loop holes. Is DHFL Vysya Housing finance is good company to take loan?

Nitin Bhatia
Nitin Bhatia
8 years ago
Reply to  ram

You may check with banks and find out reasons why they are not willing to lend.

Amit
Amit
8 years ago

Hi Nitin, I am planning to take a joint home loan alongwith my working wife and retired father(govt pensioned and 68 years old). Is it possible?
Also pls tell me if we all will be able to avail income tax benefit?

Nitin Bhatia
Nitin Bhatia
8 years ago
Reply to  Amit

It is possible but subject to risk assessment by the bank. You can avail tax deduction provided you are co-owner and co-borrower of the property.

kawal
kawal
8 years ago

Hello nitin ji..i have an existing home loan at HDFC with me as the owner and husband as a co-borrower…the bank promised tax benefits to both ..is it true?
Also now I wanted to transfer my loan to LIC-HFL and include my daughter as a co-applicant ..they said she wl get tax benefits under section 80c and 24b ..is it possible? I dont want to make her d co-owner but wld like tax benefits for her since she earns well n I hv no fixed income ..regards

Nitin Bhatia
Nitin Bhatia
8 years ago
Reply to  kawal

As your husband is not a co-owner therefore he cannot avail tax deductions. Only a co-owner cum co-borrower can avail tax deductions.

MCG
MCG
8 years ago

I am a widow from Mumbai. My husband retired from SBI in 2013 and expired in May 2015. We do not have any children. We have a flat in joint name. After death of my husband, the flat is in my single name as a single owner. There is no relative of my husband. He was only son of his parents and his parents died long ago.

I have shifted to Surat, Gujarat and at present live with my younger sister, who has her own family (husband and 2 sons). In my old age they will look after me.

This year (July-2015) my sister has purchased a new flat in joint-name with her husband as co-owner. They jointly taken bank loan. She has income from job work of sewing-tailoring and computer typing at home. Her husband doing job in a private company.

My income is monthly Pension and FD interest. Mumbai flat will be given on rent. I purchased a new flat at Surat and sale deed not yet done. The full
payment is made by me only.

My question is – in Sale Deed can I (as first holder) enter my sister as a co-owner (as second holder) of the flat purchased by me?

Nitin Bhatia
Nitin Bhatia
8 years ago
Reply to  MCG

I will not suggest. You can execute a WILL in her favor if you wish.

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